RENAULT is to cut debt after a €3bn (£2.6bn) sale of shares in world number two truckmaker Volvo, which sent the French carmaker’s shares to a nine-month high yesterday.
Volvo said there would be little change in direction because Renault would remain the most influential voting shareholder. Renault sold B-class shares, which have less voting power.
Renault chief executive Carlos Ghosn said the share placing “confirms investor confidence in the future development of Volvo Group, which we share, as Renault will remain a major shareholder with 17.5 per cent of voting rights”.
He said proceeds would strengthen Renault’s balance sheet ahead of a new strategic plan next year.
French brokerage CM-CIC Securities said the move could allow Renault to “seize the opportunity for a stakeholding partnership with General Motors” ahead of the US carmaker’s IPO.
The sale of shares will sharply reduce Renault’s debt as it invests in electric cars and emerging markets.
The stake sold represents 14.9 per cent of Volvo shares and 3.8 per cent of voting rights. It left Renault with 6.8 per cent of Volvo’s share capital and 17.5 per cent of voting rights. The A shares have 10 times the vote of B shares.
Renault said the proceeds from the private placement to institutional investors would help bring net debt below €3bn from €4.6bn, in line with targets. Renault had said its stake in Volvo was “not strategic”, but Ghosn said last week it was “a very good asset” and Renault would remain for “a very long time”.
Renault is now the second-biggest owner of overall capital in Volvo.
City A.M. Reporter