Fiat seeks $6.8 billion state-backed loan to weather crisis


Fiat Chrysler Automobiles NV is in talks to obtain a state-backed credit line of about 6.3 billion euros ($6.8 billion) to buttress the carmaker’s finances against the steep downturn caused by the coronavirus, according to people familiar with the matter.

Fiat’s local unit is discussing the facility with lead lender Intesa Sanpaolo SpA, the people said, asking not to be named because the matter is private. Sace SpA, Italy’s trade-credit insurer, will provide a public guarantee for 80% of the amount, they said.

The guarantee would need to be granted by a decree of the Finance Ministry, the people added.

Representatives for Fiat Chrysler, Intesa and Sace declined to comment.

The Italian-American carmaker is seeking to shore up liquidity after burning 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 earlier 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.

Fiat Chrysler shares were little changed at 7.17 euros as of 2 p.m in Milan on Friday after rising as much as 3.1%.

Italy, hard hit by the virus outbreak, is trying to prop up its battered economy with a second stimulus package worth 55 billion euros. Prime Minister Giuseppe Conte’s government this week approved measures focused on liquidity for businesses and aid to families hurt by over two months of a nationwide lockdown.

The Fiat Chrysler loan would be the largest financing guaranteed by a European government during the pandemic after Renault SA’s 5 billion-euro deal last month.

Last month, Italy approved a package of 200 billion euros of state guarantees for loans to larger companies through Sace.

Fiat Chrysler has already raised almost 10 billion euros to manage through the crisis. It earlier took out a new, 3.5 billion-euro loan from, and drew down 6.25 billion euros from an existing revolver.

MF Milano Finanza reported earlier on the guarantee.

The Italian-American carmaker is seeking to shore up liquidity after burning through $5.5 billion in the first quarter while its North American plants were shuttered and new-car demand stalled.