Italy has approved a decree offering state guarantees for a 6.3-billion euro ($7.1 billion) loan to Italian unit of Fiat Chrysler Automobiles (FCA), a source said, paving the way for the largest crisis loan to a European automaker.
The source stated the country’s audit court had signed off on the decree, in a final step of what had been a long and contested procedure to get the loan approved. The court’s approval came after an endorsement by the economy ministry.
“The audit court authorized the decree,” said a source knowledgeable about the matter, asking not to be named as the information was not made public.
FCA’s Italian division has tapped Italy’s COVID-19 emergency financing schemes to secure a state-backed, three-year facility to help the automaker’s operations in the country, together with country’s automobile sector in which about 10,000 businesses operate.
The loan will be disbursed by the country’s biggest retail bank Intesa Sanpaolo, which has already authorized it pending the approval of guarantees the government will give on 80% of the sum through export credit agency SACE.
The request for state support has also attracted controversy because FCA is working to merge with French rival PSA and the holding for the Italian-American automaker is registered in the Netherlands. FCA’s global brands include Fiat, Jeep, Dodge, and Maserati.
It was not immediately clear what those conditions are if any, Italy has set as part of the guarantees and whether they would affect the automaker’s planned 5.5 billion euro extraordinary dividend, which is a major element in the merger with PSA.
