French automotive manufacturer PSA Group has managed to secure an additional $3.3 billion in loans, which it plans to use to strengthen its finances to better deal with the financial crises plaguing the industry. The company announced on Monday that it is actively strengthening its financial position to survive the coming months.
The global auto industry has been heavily affected by the continued spread of the coronavirus outbreak. Carmakers are now scrambling to find ways to deal with the disruption in the supply chain and the decrease in demand due to the ongoing lockdowns and stay-at-home orders imposed by governments worldwide.
PSA chief financial officer, Philippe de Rovira, mentioned in a statement that the newly acquired loans should reinforce the company's ability to face the dire situation. It will also serve as a necessary precautionary measure to ensure its recovery. He added that the amount it was able to secure should serve as evidence of the confidence of financial institutions in its resilience and its financial strength.
The Peugeot car brand-owner did not elaborate where it had acquired its loans but the French government did announce last month that it was entitled to state-backed guarantees on loans and leeway on bills. PSA did not mention if any of its newly acquired loans had state support.
Like other European manufacturers, PSA has been forced to temporarily shut down its operations amid the ongoing pandemic. The company previously announced that it would be suspending output in Europe until further notice. The manufacturer also stated that it will be postponing negotiations with Fiat Chrysler involving their long-planned merger. Its annual shareholder's meeting has been rescheduled from May to June in light of the recent circumstances.
Last month, Moody's announced that it will be revising its credit ratings for several European automakers, including PSA and Renault, for possible downgrading. The agency stated that the coronavirus crisis has had a particularly negative impact on the companies following its spread in the region.
This week, PSA saw its shares recover slightly from months of decline, surging by more than 8.3 percent. The increase was part of the broader global equity market rally, which saw shares of other European automakers go up.
PSA's rival, Renault, saw its shares surge by 8 percent this week following an announcement by top executives of a new program to secure its business. Renault revealed that it will be announcing its three-year plan in mid-May, which will involve generating billions of dollars in savings among other strategies.
