Fiat Chrysler in talks over $6.8 billion state-guaranteed loan - source

MILAN (Reuters) - Fiat Chrysler is in talks with Italian lender Intesa Sanpaolo over a 6.3 billion euro ($6.8 billion) state-guaranteed loan to help the automaker weather the coronavirus crisis, a source close to the matter said on Friday. Fiat Chrysler (FCA) has gradually restarted its operations in Italy since the end of April, after the crisis triggered by the virus virtually erased demand for new vehicles, pushing manufacturers to temporarily halt most production and burn cash. The loan, which is part of emergency liquidity measures the government is making available to the country's businesses, must be approved by Intesa Sanpaolo's board, the source said.

Reuters May 16, 2020 00:05:35 IST
Fiat Chrysler in talks over $6.8 billion state-guaranteed loan - source

Fiat Chrysler in talks over 68 billion stateguaranteed loan  source

MILAN (Reuters) - Fiat Chrysler is in talks with Italian lender Intesa Sanpaolo over a 6.3 billion euro ($6.8 billion) state-guaranteed loan to help the automaker weather the coronavirus crisis, a source close to the matter said on Friday.

Fiat Chrysler (FCA) has gradually restarted its operations in Italy since the end of April, after the crisis triggered by the virus virtually erased demand for new vehicles, pushing manufacturers to temporarily halt most production and burn cash.

The loan, which is part of emergency liquidity measures the government is making available to the country's businesses, must be approved by Intesa Sanpaolo's board, the source said.

If approved by the lender, the request will be reviewed by Italy's export credit agency SACE, through which the state provides its guarantee, and then by the Treasury for a final green light, the source added.

FCA, Intesa and SACE declined to comment.

News that FCA was exploring a state-backed loan was first reported by MF daily on Friday.

FCA, which has its legal headquarters in the Netherlands, runs several plants in Italy and may qualify through its local unit for the government scheme, which offers more than 400 billion euros' worth of liquidity and bank loans to companies hit by the pandemic.

Under the scheme, state guarantees cover 80% of loans for companies with annual revenues of 1.5 billion to 5 billion euros and 70% for companies with revenues over 5 billion euros. FCA did not provide a revenue breakdown for its domestic unit in its 2019 financial statement.

Companies using Rome's scheme for state guarantees on loans must refrain from approving dividend payments for a year.

FCA and Peugeot owner PSA, which have struck a binding merger agreement to create the world's fourth largest carmaker, earlier this week said they would not pay their planned ordinary dividends on 2019 results, worth 1.1 billion euros each, due to the COVID-19 pandemic.

However, as part of the tie-up deal, FCA is also due to pay to its shareholders a special dividend of 5.5 billion euros just before the closing of the merger, which the two groups confirmed was expected before the end of the first quarter of next year.

In the first quarter of this year, FCA's industrial free cash flow was a negative 5 billion euros. But FCA said it had available liquidity of 18.6 billion euros as of March 31, including a 6.25 billion revolving credit facility which was fully drawn down in April.

Last month, FCA also completed the syndication of a 3.5 billion euro credit facility with banks.

($1 = 0.9232 euros)

(Reporting by Giulio Piovaccari and Stefano Bernabei, additional reporting by Valentina Za, editing by Cristina Carlevaro, Mark Potter and Hugh Lawson)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.