PSA/Peugeot-Citroen has received the approval of the European Union to receive up to €7 ($9.28) billion in debt issuance from the French government.

PSA/Peugeot-Citroen has received the approval of the European Union to receive up to €7 ($9.28) billion in debt issuance from the French government.

The move will allow the company to strengthen their Banque PSA Finance division which has been hit by a series of credit downgrades. These downgrades resulted in higher borrowing costs which were passed on to PSA/Peugeot-Citroen customers who wanted to finance or lease vehicles.

Under the terms of the deal, PSA/Peugeot-Citroen will be obligated to "refrain from making major acquisitions" and "maintain the margin for loans granted by Banque PSA Finance to dealers."

The company still faces an uphill battle but the European Commission believes PSA/Peugeot-Citroen's "restructuring plan, together with the undertakings from the French authorities, will enable the PSA group to return to viability, while at the same time protecting in a balanced way the interests of competitors who have not had public funding."

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