PSA Peugeot CitroŽn announces major business and financial projectsParis - 19 February 2014
PSA Peugeot CitroŽn announces today major business and financial projects aimed at improving its competitiveness and accelerating its globalisation and emerging markets expansion strategy, while reinforcing its financial strength. They represent a continuation of the measures undertaken as part of the Rebound 2015 plan, the new Social Contract and the “Back in the Race” strategic plan that the Group will present in April 2014.
The operations would consist of:
1. The strengthening and deepening of the existing industrial and commercial partnership with Dongfeng Motor Group (“DFG”), China’s second largest carmaker, in order to capitalise on the Group’s current success in the world’s largest automobile market, which is now the primary source of growth for the automotive industry.
2. €3.0 billion capital increases with a free attribution of equity warrants to existing Peugeot SA shareholders, including:
3. A capital increase reserved for employees will be offered in the course of 2014, in order to give them the opportunity to participate in the value creation potential of the Group.
which have been agreed in principle by the parties involved, remain
subject to the signature of final documentation, planned at the end of
March 2014, and the approval of regulatory bodies, notably in France
These operations are aimed at:
o Accelerating PSA Peugeot CitroŽn’s development via the financing of a program of strategic investments;
o Strengthening its balance sheet and liquidity, resulting into a strong decrease of financial charges
Group trade unions of the Group are aligned with these projects and the Peugeot SA Work Council, consulted in
The President of the Supervisory Board said:
1) Accelerating the Group’s international development by strengthening the industrial and commercial partnership with DFG
With nearly 16 million vehicles sold in 2013 and an annual growth of c. 18% between 2013 and 2015, China is the
DFG is a listed company on the Hong Kong stock exchange and with a market capitalization of c. €9.5 billion, estimated revenues of €17.3 billion and EBITDA of €1.9 billion in 2013 *, is:
Today, DFG and PSA Peugeot CitroŽn are taking their more than 20 year-old partnership to the next level by implementing a major industrial plan, structured around three main axes:
o The licensing of technologies developed by PSA Peugeot CitroŽn ;* Based on Thomson consensus and CNY/ EUR exchange rate of 8.32 as of 31 December 2013
o The launch of two to three new models a year globally for the three brands (Peugeot, CitroŽn and DPCA’s own brand).
o This R&D center will complete PSA Peugeot CitroŽn’s R&D footprint in Europe and Latin America ;
o This agreement will include measures relating to the management of intellectual property, allowing PSA Peugeot CitroŽn to freely pursue the development of cooperation ventures with other carmakers.
This broader and deeper partnership represents, under its current form, synergies estimated at around €400 million per year for PSA Peugeot CitroŽn by early 2020s and could later be extended to other areas of collaboration.
The Group has also successfully launched its DS line in China in 2013 through with its partner Chang’an Automobile Group through its JV CAPSA, co-owned 50/50. These agreements have no impact on the DS line development plan in China, which is designed to maximise capacity utilization at the Shenzhen plant in 2018.
Moreover the Alliance with General Motors continues in Europe and is delivering additional growth and synergies estimated at $1.2 billion by 2018, shared equally by the two partners.
2) €3.0 billion capital increases aimed at strengthening the Group’s balance sheet and investment capacity, in order to maintain its technological leadership and accelerate its growth projects outside Europe.
a. €3.0 billion capital increases
Subject to the approval by the extraordinary general meeting of Peugeot SA shareholders to be held in Q2 2014
completion of this reserved issue, Peugeot SA would undertake a c.
€1,950 million capital increase with pre-emption rights open to all
existing shareholders (including DFG and the French State), on the
basis of one
DFG’s investment through the two successive capital increases, for a total amount of €800 million, would accompany the deepening of this historic industrial partnership. The French State would invest the same amount as DFG. FFP/EPF’s investment should amount to c. €150 million to €250 million, depending on definitive conditions and terms set in the context of the rights issue.
Subject to the approval by the extraordinary general meeting of Peugeot SA shareholders and to the other conditions detailed above, current Peugeot SA shareholders (i.e. not including DFG nor the French State) would receive, ahead of the reserved capital increase and the rights issue, one free equity warrant per share held, enabling them to increase their exposure to the Group’s value creation potential.
1. The exercise of 10 equity warrants would give the right to purchase 3 new shares ;
2. Their exercise price would be €7.5, allowing current shareholders to subscribe to new shares at the
3. Their maturity would be 3 years and the warrants would be exercisable from year-2. They would be
4. Proceeds from a potential exercise would represent an additional c. €770 million in case all equity
b. Efficient and balanced governance
Current dual structure would be maintained, the Management Board is responsible for the definition and the execution of the strategy. Carlos Tavares is to be appointed as Chairman of the Managing Board succeeding Philippe Varin on March, 31st 2014.
Upon completion of the contemplated operations, the governance of the Group would be modified to take into account DFG and the French State as new shareholders.
The Supervisory Board composition of Peugeot SA would be balanced and in compliance with the AFEP-MEDEF code. It would be composed of 6 independent members, 2 representatives of each DFG, the French State and FFP/EPF, and 2 members representing employees and employees shareholders. The Supervisory Board would be chaired by an independent member.
The composition and chairmanship of the various committees would also be modified, with notably the creation of a committee overseeing development in Asia which would be chaired by a member proposed by DFG. The governance committee would be chaired by an independent member, while the audit committee would be chaired by a member proposed by the French State and the strategic committee by a member proposed by FFP/EPF.
DFG, the French State and FFP/EPF would undertake individually not to acquire any shares of Peugeot SA beyond the initial number of shares owned post-contemplated operations.
DFG, the French State and FFP/EPF could sell all or part of their shares freely after a customary lock-up period in-line with market standards in the context of the rights issue.
Double voting rights would be granted to shareholders following a holding period reduced from four years (as
DFG, the French State and FFP/EPF will not act in concert in relation to Peugeot SA.
c. Contemplated capital increase will strengthen PSA Peugeot CitroŽn’s balance sheet and investment capacity in order to implement “Back in the Race” strategic plan
The €3 billion capital increase, together with the renewal of PSA Peugeot CitroŽn’s syndicated credit facility of €2.7 billion, comprising a €2.0 billion five-year tranche, will strengthen the Group’s balance sheet and liquidity position.
These transactions will also enhance PSA Peugeot CitroŽn’s investment capacity, and fund the launch of investments related to its new ę Back in the Race Ľ strategic plan, in order to strengthen its competitiveness in Europe and its globalization strategy:
- Debt reduction
- Cost competitive product portfolio and in depth localization to restore competitiveness in Latin America and Russia
- Technology including the next generation Hydrid Powertrain
- CAPEX in capacities:
o New Social Contract commitment in Europe with €1.5 billion capex expenditures in France
o Extension of competitive manufacturing footprint for selected products and markets.
Morgan Stanley and Rothschild acted as financial advisors to PSA Peugeot CitroŽn for the industrial and commercial partnership with DFG and the €3.0 billion capital increases. Bredin Prat acted as legal advisor to PSA Peugeot CitroŽn for all of these transactions.
Banco Santander, BNP PARIBAS, Citigroup, Crťdit Agricole Corporate and Investment Bank, Deutsche Bank, HSBC, Morgan Stanley, Natixis and Sociťtť Gťnťrale Corporate & Investment Banking are acting as Global Coordinators and Joint Bookrunners on the contemplated rights issue. White & Case LLP acted as legal advisor to the banks syndicate.
Important informationNo communication and no information in respect of this transaction may be distributed to the public in any jurisdiction where a registration or approval is required. No steps have been or will be taken in any jurisdiction (other than France) where such steps would be required. The issue, the subscription for or the purchase of Peugeot S.A.’s shares and/or warrants may be subject to specific legal or regulatory restrictions in certain jurisdictions. Peugeot S.A. assumes no responsibility for any violation of any such restrictions by any person.
This announcement is not a prospectus within the meaning of Directive 2003/71/EC of the European Parliament and the Council of November 4th, 2003, as amended, in particular by Directive 2010/73/EU to the extent such Directive has been transposed in the relevant member State of the European Economic Area (together, the “Prospectus Directive”).
No securities offering will be opened to the public in France before the delivery of the visa on a prospectus prepared in compliance with the Prospectus Directive, as approved by the French Autoritť des marchťs financiers.
With respect to the member States of the European Economic Area which have implemented the Prospectus Directive (each, a “relevant member State”), other than France, no action has been undertaken or will be undertaken to make an offer to the public of the securities requiring publication of a prospectus in any relevant member State. As a result, the new shares and/or warrants of Peugeot S.A. may only be offered in relevant member States
(i) to qualified investors, as defined by the Prospectus Directive; or
(ii) in any other circumstances, not requiring Peugeot S.A. to publish a prospectus as provided under Article 3(2) of the Prospectus Directive.
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