European Commission (EC) authorities have approved a French aid measure consisting of a EUR5bn (US$5.4bn) loan guarantee to Renault to mitigate the economic impact of the coronavirus outbreak.
The measure was approved under the State aid Temporary Framework adopted by the Commission on 19 March, 2020, as amended on 3 April 2020.
“This EUR5bn French loan guarantee will help the Renault group to obtain liquidity it urgently needs due to the impact of the coronavirus outbreak,” said EC EVP in charge of competition policy, Margrethe Vestager.
“Renault is an important European car manufacturer, employing directly more than 73,000 workers in Europe. Renault is engaged in the research, development and production of the next generation of electric vehicles, the roll-out of which is essential for meeting the EU’s climate goals.
“We have cooperated closely with France to ensure this support could be put in place as quickly and effectively as possible, in line with EU rules.”
French support measure to Renault:
France notified the Commission through the Temporary Framework, an aid measure consisting of a loan guarantee by France of EUR5bn to the Renault Group, enabling it to mitigate the damage suffered from the coronavirus outbreak.
France has submitted an individual notification because the guarantee provides greater loan coverage (90%) than through the French general guarantee scheme approved by the Commission on 21 March 2020 (70% loan coverage).
The Commission’s assessment concluded the measure in favour of Renault is nonetheless in line with the conditions under the Temporary Framework.
“Renault has been obliged to close almost all of its production lines and cease most sales activity due to the emergency measures put in place by France to limit the spread of the coronavirus,” said an EC statement.
“Despite significant proposed cost saving measures and 90% of its staff being placed in part-time unemployment, the current crisis will still lead to significant deterioration in the Group’s working capital and cash flow.
“Renault requires the State-backed guarantee to ensure access to vital liquidity from financial institutions to face this difficult period, before an expected recovery in sales once the restrictions are fully lifted.”
The Commission found the measure notified by France is in line with the conditions set out in the Temporary Framework.