French Government Considering Purchase of PSA for Bailout

French Budget Minister Jerome Cahuzac has been hinting that the French government would be willing to buy a stake in PSA PeugeotPeugeotFrance, 1882 > present120 models
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to keep the company from failing. 

"Let's be clear: this company cannot, must not disappear. We'll have to do what we have to do to save this company," said Cahuzac in an interview with RMC radio.

When asked directly whether the government will buy a stake in the company, Cahuzac said: "It's possible."

The pressure on Cahuzac comes after PSA had a loss of €4.13 billion ($5.53 billion) in the second half of the year. The French newspaper Liberation reported that the government is considering buying a portion of PSA to save it as a last resort measure. 

PSA representatives have not responded about whether a bail out will happen. 

PSA sold 13% fewer cars in 2012 than in 2011, and analysts predict the European auto market will contract another 5% in 2013. As of the second half of 2012, PSA is €3 billion in debt, up €550 million since June 2012. 

Neither side has revealed how much of PSA will be owned by the government, if it is bailed out. It is expected that if the bail out happens, the government will oust current CEO Philippe Varin.

Source: Automotive News Europe