Peugeot bids to raise €3bn with Dongfeng's help

French auto group Peugeot Citroen launched on Tuesday an effort to raise 3.0 billion euros under a recovery strategy involving Chinese firm Dongfeng as a shareholder, and its shares plunged 7.0 percent in initial trading. The slice of the new shares available to ordinary shareholders was set at a discount of nearly 50 percent. The price of shares in the group plunged by 7.40 percent to 12.06 euros in early trading. The total operation is intended to raise the equivalent of $4.16 billion. The PSA Peugeot Citroen group, fighting its way out of a crippling financial crisis, said that a first issue of new shares reserved for the two new shareholders, Dongfeng and the French state, would be completed on Tuesday. The French state and Dongfeng would each subscribe 276 million euros. Once the operation was completed, the state, Dongfeng and the Peugeot family holding company would each own 14.1 percent of the group. The second slice of the capital-raising issue to raise 1.953 billion euros would be open to public subscribers from Friday to May 14 inclusive, but solely in France. These shares, for which existing shareholders would have first option to buy, would be issued at 6.77 euros each, or about half the price of the shares at the close of trading on  Monday which was 13.04 euros. The Peugeot family would subscribe 142 million euros. The group said that for existing shares held, shareholders would receive the right to subscribe for new shares, as a means of helping shareholders to maintain the size of their holdings relative to the new increased total of group shares. Twelve such rights would open the right to buy seven new shares.