The European Union has granted temporary approval to France's request to provide PSA Peugeot Citroen with up to €1.2 ($1.6) billion in loans for a term of up to 36 months.

The European Union has granted temporary approval to France's request to provide PSA Peugeot Citroen with up to €1.2 ($1.6) billion in loans for a term of up to 36 months.

As part of the proposal, PSA will have to submit a restructuring plan which shows they will be able to survive without further assistance from France or the European Union. This is rather important, as the plan has to be submitted within six months, a contingency of the loan package's approval.

PSA's declining financial state has raised eyebrows as even France appears to be growing wary of the stream of bad news. While the French parliament had pledged to offer up to €7 ($9.3) billion in loan guarantees, they only asked the European Union to approve €1.2 ($1.6) billion.

As we have previously reported, PSA is pinning their hopes on a tie-up with General Motors. The two companies have plans to share three platforms, co-develop engines and create a joint purchasing organization to reduce costs.

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