The Italian government soon will approve guarantees for EUR6.3bn (US$7bn) of finance for Fiat Chrysler (FCA), two Reuters sources familiar with the matter said, paving the way for the largest crisis loan for a European carmaker.
The report said FCA’s Italian division had applied for funds from the government’s COVID-19 emergency financing schemes to secure a state backed, three year facility to support group operations in the country as well as Italy’s car sector, in which about 10,000 businesses operate.
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The loan would be managed by Italy’s biggest retail bank Intesa Sanpaolo, which has already authorised it pending the approval of guarantees the government would provide on 80% of the sum through export credit agency SACE.
The two Reuters sources said the government would soon unveil its green light, following work to finalise the terms.
Both FCA and Italy’s Treasury declined to comment to the news agency.
According to the report, newspaper Il Sole 24 Ore reported on Sunday the final terms of the FCA loan included a slight increase in the company’s planned investments in Italy to EU5.2bn from EUR5bn.
Crisis loans in Italy are subject to a number of conditions, including a temporary dividend suspension.
The newspaper said, however, that the conditions would allow FCA’s Dutch holding company to pay a EUR5.5bn extraordinary dividend to shareholders once the carmaker’s planned merger with PSA goes through.
The extraordinary dividend has been a focal point of discussions in Italy about the large state backed loan, Reuters noted.
Il Sole said the freeze on dividends, which applies until 31 December, 2020, could be extended for the duration of FCA’s loan if it is responsible for any delays in industrial projects which are part of its commitments.
An extended freeze would affect both FCA Italy and its Dutch holding company, except for the extraordinary dividend payments linked to the merger, the paper said, according to Reuters.
