French auto group PSA Peugeot Citroen, struggling with deep restructuring and just supported with state guarantees, said on Wednesday that sales had fallen by 3.9 percent in the third quarter and that it was waiving dividends.
The group, which has announced 8,000 job cuts and a plant closure, said that sales fell to 12.9 billion euros ($16.7 billion) in the quarter amid increasing competition and a weakening of the European market.
It warned that it now expected sales in Europe, its main market, to fall by 9.0 percent instead of 8.0 percent forecast previously.
And it expected its net debt to rise to 3.0 billion euros at the end of the year instead of 2.4 billion euros.
The group's financial arm BPF announced that it would receive state guarantees totalling 7.0 billion euros over three years.
The second biggest carmaker in Europe said that in return it would not pay a dividend or issue stock options during this period.
BPF said it had also obtained cash facilities from banks amounting to 11.5 billion euros of which 1.0 billion euros was an additional sum.
Group finance director Jean-Baptiste de Chatillon said that most of these credit lines had already been negotiated for 2013-2015.
"The state has announced its intention to provide its guarantee for refinancing in respect of new bond issues in the next three years, up to 7.0 billion euros," he said.
This would enable BPF to leverage its assets and to launch a savings plan for savers in France, as the financial arm of French rival automaker Renault had done recently, he said.
The government said in a separate statement that another condition attached to the state guarantee was the creation of a monitoring committee on which the state, PSA and an independent administrator would sit.
A representative of the staff of PSA would also join the group's supervisory board.
An independent expert brought in to examine the planned job cuts found that restructuring was needed because of strategic mistakes going back 20 years and as the company had failed to keep up with globalisation.
In a separate statement, the group announced a four-pronged programme for joint industrial projects with its strategic partner GM of the United States.
The price of shares in PSA fell 3 percent in morning trading in response to the announcements.