France to PSA: No Aid Without Sacrifice

The French government has told PSA Peugeot Citroen that the struggling carmaker won't receive federal aid unless it makes concessions, Industry Minister Arnaud Montebourg tells Europe 1 radio.

Montebourg says one condition might be requiring PSA to suspend dividends. He adds that the government's plan due on July 25 could include incentives for "clean" vehicles but not a scrappage scheme. The company denied early this month that it was seeking state aid.

PSA said last week it would close a plant in France and cut as many as 8,000 jobs in the country. President Francois Hollande has urged the company to scale back those plans. France has commissioned an independent report on the company's finances, which is due by the end of the month.

Montebourg declares that the government has a "real problem" with PSA's strategy and recent cost-sharing alliance with General Motors Co. He didn't elaborate on his objections to the latter.

Montebourg also criticized the Peugeot family, which holds a 38.1% voting stake in the company and three of PSA's 12 board seats. He blames the family for allowing the company to pay €250 million in dividends to shareholders last year and conduct a €199 million stock buyback knowing that financial trouble was brewing.

The family responds that it has always put the company first and invested €133 million in March when PSA raised fresh capital.