Peugeot Citroen, Renault each reimburse euro1B ($1.27B) in bailout loans from French state

Renault, Peugeot Citroen reimburse $2.5B to state

PARIS — Carmakers Renault and PSA Peugeot Citroen said Friday they are reimbursing ahead of schedule €1 billion ($1.27 billion) each in loans that were part of the French state bailout of the auto industry.

The French companies said they would each pay back €1 billion ahead of the 2014 deadline to reduce interest costs.

Both companies’ shares enjoyed a boost after the announcement. Peugeot rose 1.8 percent to €23.06. Renault gained 1.8 percent to €35.89.

Each company won a loan of €3 billion in 2009 as part of a government rescue effort for the auto industry, and both returned to profit in the first half of 2010 after a bruising couple of years in the car sector worldwide.

Renault SA reported €780 million in profits in the first half on higher car sales in all regions, while PSA Peugeot Citroen SA reported €680 million in profits for the same period, beating market expectations thanks to strong demand in China and a raft of new models.

Peugeot Citroen and Renault said the reimbursements would reduce overall debt and allow a significant drop in financial charges.