Fiat Chrysler nears $6.9 billion state-backed loan from Intesa1 min read . Updated: 26 May 2020, 10:45 AM IST
The state-guaranteed loan is designed to bolster the domestic auto industry by directly channeling resources to Fiat’s suppliers.
Lender Intesa Sanpaolo SpA is nearing approval of a 6.3 billion-euro ($6.9 billion) credit facility for Fiat Chrysler Automobiles NV, in what would be Europe’s biggest government-backed financing to a carmaker since the start of the coronavirus pandemic.
Intesa has scheduled a Tuesday board meeting to approve the deal, according to people familiar with the matter.
Top executives from Fiat Chrysler and Intesa discussed terms over the last few days and have reached an agreement, said the people, who asked not to be named because deliberations aren’t public. While Intesa’s approval is a crucial step, the financing needs a sign-off from trade-credit insurer Sace SpA and by the Italian government.
Spokesmen for both Fiat Chrysler and Intesa declined to comment.
The state-guaranteed loan is designed to bolster the domestic auto industry by directly channeling resources to Fiat’s suppliers. The credit facility under discussion would be for Fiat’s Italian unit, which last year lost about $1 billion before taxes. Car sales in Italy plunged 98% in April and Fiat’s plants were mostly shuttered during the nationwide lockdown in March and April.
In the envisaged deal, Italy’s top lender would lead a three-year loan facility to help finance the manufacturer’s business in the country, Fiat Chrysler said in a statement earlier this month. Sace would guarantee 80% of the amount through a mechanism that would need final approval by the Finance Ministry.
Carmakers have been among the hardest-hit industries during the Covid-19 crisis, with factory shutdowns and cratering sales in markets from China and Europe to the U.S.
Fiat Chrysler burned through $5.5 billion in the first quarter, and the Italian-American company and French peer PSA Group earlier this month scrapped a plan to pay out 1.1 billion euros in dividends as part of their 2019 merger agreement.
The new financing plan would “provide further support to some 10,000 small and medium enterprises in the automotive supply chain in Italy," Fiat Chrysler said in its May 16 statement.
This story has been published from a wire agency feed without modifications to the text.