PSA Gets Loan Guarantees from France

The French government confirms it has agreed to provide €7 billion ($9.1 billion) in loan guarantees to PSA Peugeot Citroen's finance arm in 2013-2015 to enable the unit to borrow money at lower interest rates.

The goal is to help Banque PSA Finance support the automaker's flagging sales by providing affordable loans to dealers and buyers of Citroen and Peugeot vehicles. The program requires EU approval.

In return, PSA will grant one board seat to a labor representative and another to a government-approved independent director. The company promises not to pay dividends, buy back shares or grant stock options to its executives for the duration of the government guarantees.

Prime Minister Jean-Marc Ayrault says he also has asked PSA CEO Philippe Varin to "redesign" the company's restructuring plan, which includes closing a plant near Paris and cutting 8,000 jobs in France.