Rome: Fiat Chrysler Automobiles NV said it’s in talks to obtain an Italian state-backed credit line of as much as 6.3 billion euros ($6.8 billion) to buttress the carmaker’s finances after the coronavirus caused a steep downturn.
The company’s Italian unit is in discussions with Intesa Sanpaolo SpA as the lead lender, the company said in an Italian stock exchange filing late Saturday. Bloomberg reported on the talks on Friday. The company said it’s discussing a three-year credit facility.
The financing would be “dedicated exclusively to financing FCA’s activities in Italy” and support about 10,000 enterprises in the automotive supply chain in Italy after Fiat Chrysler reopened plants in the country in late April, according to the statement.
Sace SpA, Italy’s trade-credit insurer, will provide a public guarantee, the company said. The FIM-Cisl union said earlier that the guarantee would be for 80% of the financing amount. The guarantee would need to be granted in a decree by the Finance Ministry, people familiar with the discussions said on Friday.
The Italian-American carmaker burned through $5.5 billion in the first quarter while its North American plants were shuttered and new-car demand stalled. Fiat Chrysler and French peer PSA Group decided this week to scrap the 1.1 billion-euro dividends that each agreed to pay as part of their merger agreement, citing the negative impact of the coronavirus pandemic.
The Fiat Chrysler loan would be Europe’s biggest government-guaranteed financing for a carmaker related to the pandemic. Renault SA struck a 5 billion-euro deal last month.
Fiat Chrysler already raised almost 10 billion euros to help it weather the crisis. Earlier, it took out a new, 3.5 billion-euro loan and drew down 6.25 billion euros from an existing revolving facility.