Renault to Sell Property to Raise Cash

PARIS – Renault SA has decided to sell 138 buildings in Europe over the next two years to reduce its debt.

The auto maker plans to rent back most of the properties from the purchasers, as it already does for its headquarters in Boulogne-Billancourt, a suburb of Paris.

Most buildings house offices or dealerships. The Technocentre outside Paris is not included in the plan.

Renault could raise E1 billion ($1.3 billion) over the next two years by this method, according to the Le Monde newspaper, citing unnamed sources.

At the end of last year, Renault’s debt was E7.9 billion ($10.6 billion), amounting to 40% of its capital, and this year it borrowed an additional E3 billion ($4.0 billion) from France. At the end of 2007, debt was only 9.5%. Moody’s has rated Renault as a high-risk speculative investment.

Renault Group sales were down 5.9% in France through April, in a market down 4.5%. Deliveries were off 21.7% in Europe through March, compared with an industry decline of 17.2%.

“The project to sell properties ought to permit us to traverse the crisis and clean up the financial situation to be in a better condition at the end of the crisis,” says an internal Renault document cited by the newspaper.

Renault is cutting research and development 15% from 2007 levels and has delayed construction of factories in India and Morocco.