Fiat Chrysler Automobiles said it is in talks to obtain an Italian state-backed credit line of as much as €6.3 billion (Dh25bn) to buttress the vehicle maker's finances after the coronavirus caused a steep downturn.
Carmaking is among industries that have been hit hardest by the Covid-19 crisis, which forced factory stoppages and crippled sales in markets from China and Europe to the U.S. Fiat Chrysler burned through $5.5 billion in the first quarter.
A second source said Intesa Sanpaolo would act as lead lender and that the loan to FCA would be issued by a pool of banks.
Under the scheme, state guarantees cover 80 per cent of loans for companies with annual revenues of 1.5 billion to 5 billion euros and 70 per cent for companies with revenues over 5 billion euros. Fiat Chrysler and French peer PSA Group decided this week to scrap the €1.1bn euro dividends, which both companies agreed to pay as part of their merger agreement, citing the negative impact of the coronavirus pandemic.
General Motors Co. and Ford Motor Co. have tapped credit lines to stock up on billions of dollars in cash.
The €6.3 billion facility is equivalent to 25 per cent of FCA's industrial subsidiaries in Italy, as per the government's decree.
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General Motors and Ford have tapped credit lines to stock up on billions of dollars in cash while Fiat Chrysler has raised nearly €10bn. The carmaker in 2014 moved its legal headquarters to the Netherlands and its tax residence to the United Kingdom.
Fiat Chrysler (FCA) has gradually restarted its operations in Italy since the end of April.
"A company applying for large sums of money from the Italian state brings its headquarters back to Italy", said the vice president of the Democratic Party, Andrea Orlando, on Twitter yesterday.
The Fiat Chrysler loan would be Europe's biggest government-guaranteed financing for a auto maker related to the pandemic. Having offered support for businesses such as bikes and scooters, Italy should now focus on the much bigger automotive sector, said Marco Bentivogli, leader of the Fim Cisl union.
Italian Prime Minister Giuseppe Conte said on Saturday that Fiat Chrysler was entitled to apply for Italy's state-backed loans because the automaker employs thousands of people in the country, even though its legal base is located overseas.
In Italy, Fiat employs about 55,000 workers at 16 plants and 26 research and development sites. Some 200,000 jobs at 5,500 suppliers are linked to Fiat's local operations.
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