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Fiat pursue €6.3bn loan backed by government

 

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Shut: Fiat’s Turin factory. Photo: Massimo Pinca/Reuters

Shut: Fiat’s Turin factory. Photo: Massimo Pinca/Reuters

REUTERS

Shut: Fiat’s Turin factory. Photo: Massimo Pinca/Reuters

Fiat Chrysler Automobiles and Italy's Intesa Sanpaolo bank are negotiating a state-backed credit line of as much as €6.3bn in Europe's biggest government-guaranteed financing for a carmaker since the coronavirus pandemic.

Italy's top lender would lead a three-year loan facility to help finance the manufacturer's business in the country, Fiat Chrysler said.

Sace, Italy's trade-credit insurer, will guarantee 80pc of the amount in a mechanism that would need approval by the finance ministry.

Carmaking is one of the industries that has been hit hardest by the Covid-19 crisis, forcing factory stoppages and crippling sales from China to Europe and the US. Fiat Chrysler burned through $5.5bn (€5bn) in the first quarter.

The Italian-American company and French peer PSA Group last week scrapped the €1.1bn dividends that each agreed to pay as part of their 2019 merger agreement.

The financing would "provide further support to some 10,000 small and medium enterprises in the supply chain in Italy following the reopening of the company's Italian plants beginning at the end of April," Fiat Chrysler said.

Companies worldwide have borrowed almost $600bn (€554m) since late March to bolster their balance sheets.

But no sector has been more aggressive than the car industry, which has tapped banks for $100bn (€92.4bn) by either making draw-downs from existing facilities or seeking new loans.

General Motors and Ford have tapped credit lines to stock up on billions of dollars in cash while Fiat Chrysler has raised almost €10bn.

Bloomberg

Irish Independent