France Delays Sale of Part of Renault Stake
October 08 2015 - 1:00PM
Dow Jones News
PARIS—France is delaying plans to sell part of its stake in
French car maker Renault SA as Volkswagen AG's emissions scandal
and a fall in emerging-market demand pummels share prices across
the auto industry.
APE, the state investment fund, was expected to sell a 4.73%
stake in Renault back to the market this fall after carrying out a
complex maneuver to expand its voting power at the car maker's
annual shareholders' meeting in April.
A decline in Renault's share price is forcing the state to hold
on to the shares, betting their value will rebound. On Thursday,
APE announced it had begun to execute a series of options contracts
designed to protect the state against potential losses.
With the options contracts maturing from October through
December, APE decided to keep the shares rather than selling at an
undisclosed strike price fixed in the contracts. Instead, APE will
receive a payment from a counterparty bank to cover the difference
between the strike price and the current market value of the
shares.
The move saddles the state with Renault shares that have fallen
27% since their most recent May 22 high.
On Thursday, the fund reaffirmed its plans to eventually sell
the stake without specifying a timeline. APE originally purchased
the stake—increasing its ownership in Renault from 15% to 19.7%--to
amass enough shares to acquire veto power for a key April 30
shareholder meeting.
Renault's management had called a vote on a resolution to exempt
the company from a law that would have granted double-voting rights
to the state and other long-term shareholders. The government
successfully blocked that maneuver.
The move was controversial. Not only was the state meddling in
the affairs of one of France's largest car makers, it was also
threatening the balance between the car manufacturer and its
Japanese alliance partner, Nissan Motor Co.
Renault owns a 43.4% stake in Nissan while the Japanese firm in
turn owns a 15% stake in Renault. However, French cross-holding
rules prevent Nissan from having a vote in Renault's affairs.
Economy minister Emmanuel Macron stated at the time that the
expanded shareholding stake was a temporary measure to uphold the
double-voting rights, and that he intended to sell down the stake
following the vote.
Write to Jason Chow at jason.chow@wsj.com and Stacy Meichtry at
stacy.meichtry@wsj.com
Access Investor Kit for "Volkswagen AG"
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=DE0007664039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 08, 2015 12:45 ET (16:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.