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DFG and PSA Officially Sign a Capital Increase and Equity Participation Agreement


France local time on March 26th, DongFeng Motor Group Co., Ltd. (hereinafter referred to as DFG), the Government of France, the Peugeot Family Company and the Peugeot Citroen Group (hereinafter referred to as PSA), signed a definitive agreement at the Élysée Palace in Paris, officially validating the Memorandum Of Understanding that was signed on February 19th. In light of this cooperation agreement, DFG will invest EUR 800 million to purchase shares issued by PSA through private placement. After that, DFG will have a 14% stake in PSA, making it PSA's first majority shareholder that keeps pace with the Government of France and the Peugeot Family.

Chinese President Xi Jinping and French President Francois Hollande both attended this signing ceremony.

The agreement was signed by Chairman of DFM and Chairman of DFG Xu Ping, Chairman of the Executive Committee of PSA Philippe Varin, French Economy and Finance Minister Pierre Moscovici, President of FFP (parent company of the Peugeot Family) Robert Peugeot and President of EPF (sister company of Peugeot) Jean-Philippe Peugeot on behalf of their respective parties.

Under the framework of this agreement, PSA and DFG will redouble their cooperation in such fields as technology R & D, purchase, production, marketing, etc., in order to boost the globalized development of both sides. In terms of production, PSA will push ahead with the development of DongFeng Peugeot Citroen Automobile Company Ltd. (DPCA) at an accelerated rate, in order to make DPCA realize an annual output and sales volume of 1.5 million units by 2020 and further enhance DPCA's competitiveness. In terms of R & D, PSA and DFG intend to jointly set up an R & D center in China, in order to develop new products and new technologies for the ever-growing Asian market. In terms of sales, both sides plan to establish a JV sales company to actively boost the sales and services of the Peugeot, Citroen and DongFeng brands in other Asian regions beyond China and make preparations for the exploitation of other emerging markets. Through this cooperation, PSA and DFG estimate that an industrialized synergistic effect worth about EUR 400 million will be brought in for each side by 2020.

PSA’s Capital Increase Plan:

The capital increase plan was made public on February 19th, 2014. Pursuant to relevant agreements, the increased capital totals EUR 3 billion, and stock subscription coupons will be issued to the existing shareholders of PSA free of charge. Details are as follows:

——In the capital increase plan, shares worth EUR 1.048 billion are reserved for DFG and the French Government, both of which will purchase the same equity at a price of EUR 7.5 per share.

——All PSA shareholders (including DFG and the French Government) are entitled to a privileged subscription of shares worth EUR 1.95 billion; the remaining part after the subscription of DFG, the French Government and FFP/EPF may be purchased by banking consortiums.

——Existing PSA shareholders (excluding DFG and the French Government) will be granted stock subscription coupons free of charge according to their stake in PSA (proportion of stake to coupon: 1:1) and 10 stock subscription coupons may be used for the subscription of three new shares. The period of validity for stock subscription coupons lasts for three years and shareholders may subscribe for new shares at the price of EUR 7.5 per share (equal to the price for DFG and the French Government to purchase PSA equity) as of next year.

In this transaction, DFG and the French Government will respectively invest EUR 800 million. After the deal is done, DFG, the French Government and the Peugeot Family will have the same proportion of stake (14%) in PSA.

Prior to April 25th, 2014, when PSA convenes the shareholders meeting, the prospectus in respect of reserved shares in capital increase and free granting of stock subscription coupons will be submitted to the French Financial Market Supervisory Authority. The capital increase plan concerning right of preemption for stock subscription will be incorporated into another prospectus after the shareholders meeting has been convened.

In 2014, PSA will put forward a plan regarding the equity participation of internal employees in order to involve its employees in the Group's rejuvenation process.

The implementation of the above-mentioned actions shall be subject to the approval of the relevant authorities of France and China and the consent of the PSA shareholders meeting.


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