EC Gives Preliminary Okay for French Stake in PSA

PSA Peugeot Citroen has been given initial European Commission approval to make the French government a 14% owner of the company, Bloomberg News reports.

France's finance ministry says it has received a letter from the EC's competition commissioner stating that "at first glance" the plan appears to comply with EU rules on state aid.

PSA intends to raise €3 billion, with the French state at China's Dongfeng Motor Group Co. each contributing approximately half the total.

The French government previously made a €7 billion guarantee of new bonds issued by Banque PSA Finance, the company's captive financial services unit. PSA says capital raised by the equity sale will be used to reduce debt, increase product development and expand operations in China and elsewhere.