The Italian government has confirmed a 6.3-billion euro ($7.1 billion) loan to Fiat Chrysler’s Italian business unit by approving a decree offering the government’s guarantees for the loan, said reports quoting source information.
That has now ensured the path for the largest novel coronavirus pandemic related loan to any European car making company.
The decree was signed off by Italy’s audit court, said the reports quoting sources which was the last step of the government approval of the loan guarantee process which has been a long, contested and tedious one. Prior to the approval of the court, the economy ministry of the country had already endorsed the loan.
“The audit court authorized the decree,” a news report quoted a source close to the matter. The sources were not named in the reports because of the sensitivity of the development.
This guarantee to FCA’s Italian division is a part of the emergency financing schemes launched by the Italian government in response to the pandemic created crisis. The loan package guaranteed by the government has a three year tenure which will be used by the car making group to invest in its operations in the country as well as Italy’s car sector in which about 10,000 businesses operate.
Italy’s biggest retail bank Intesa Sanpaolo will disburse the loan to the company. The bank had already approved the loan but could not disburse it as it was awaiting the approval of the government guarantee of the loan. It has been reported that 80 per cent of the loan would be provided through the export credit agency SACE.
There was quite a controversy in Italy after FCA approached the government for the loan because the company is in a process of merging with its French rival PSA. Further, the holding company of the Italian-American carmaker is registered in the Netherlands and not in Italy.
Some of the global brands manufactured by FCA include Fiat, Jeep, Dodge and Maserati.
The reports however did not make it clear the loan terms and conditions of the loan, if any, that the Italian government has imposed on the car maker as a part of the guarantees and whether this development will have any impact on the planned 5.5 billion euro extraordinary dividend of he company which is one of the most important elements of its merger with the PSA.
FCA’s shares shed about 0.5 per cent after the news broke. There has been no comment made by FCA on the issue.
(Adapted from Reuters.com)