MILAN — Fiat Chrysler Automobiles is in talks to obtain a state-backed credit line of about 6.3 billion euros ($6.8 billion) from Italy to buttress the automaker’s finances against the steep downturn caused by the coronavirus, according to people familiar with the matter.
FCA’s local unit is discussing the facility with lead lender Intesa Sanpaolo, the people said, asking not to be named because the matter is private.
Sace, Italy’s trade-credit insurer, will provide a public guarantee for 80 percent of the amount, they said. The guarantee would need to be granted by a decree of the Finance Ministry, the people said.
Representatives for Fiat Chrysler, Intesa and Sace declined to comment.
The automaker is seeking to shore up liquidity after burning through $5.5 billion in the first quarter while its plants were shuttered, and new-car demand stalled.
FCA and Peugeot maker 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.
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’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.
FCA already has raised fresh funds to manage through the crisis. In late March it obtained a new 3.5 billion euros credit facility; one month later it announced it had drawn down 6.25 billion euros from an existing revolver, plus 1.5 billion drawn from bilateral credit lines.
