Fiat Chrysler Automobiles has confirmed that it is in discussions to obtain an Italian state-backed credit line of as much as 6.3 billion euros ($6.8 billion) to bolster the automaker’s finances after the Coronavirus prompted a steep downturn.

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In a statement on Saturday, the company revealed that talks were ongoing with lender Intesa Sanpaolo for a three-year credit facility exclusively dedicated to the group’s activities in Italy. It would help to support about 10,000 enterprises in the automotive supply chain in Italy.

FCA 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.

The automaker has gradually restarted its operations in Italy since the end of last month after they were closed due to government Coronavirus lockdowns. The automaker on Tuesday released plans detailing how it will resume North American production.

Italian Prime Minister Giuseppe Conte said on Saturday that FCA was entitled to apply for Italy’s state-backed loans because the automaker employs thousands of people in the country, even though the company has its legal headquarters in the Netherlands.

“We are not talking about the parent company, we are talking about the group’s companies in Italy, which employ thousands of people,” the Prime Minister said.

FCA runs several plants and research and development centres in Italy, directly employing around 55,000 people. In addition, more than 200,000 people work in Italy’s 5,500 parts suppliers and 120,000 people in car dealers and service companies, with the automotive industry accounting for 6.2 per cent of Italy’s domestic product, FCA said.

The loan guarantee program is part of emergency measures the Italian government is making available to the country’s businesses. It offers more than 400 billion euros’ worth of liquidity and bank loans to companies hit by the pandemic.

Companies using the program must not approve dividend payments for a year.

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 agreement to merge to create the world’s fourth-largest automaker. 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 automakers confirmed was expected before the end of the first quarter of next year.

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Intesa Sanpaolo would act as lead lender and the loan to FCA would be issued by a pool of banks, a source told Reuters.

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

In the first quarter, FCA’s industrial free cash flow was a negative 5 billion euros. But the company 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.

Political criticism

News that FCA was asking the Italian government for liquidity support had raised criticism.

The ruling party PD’s deputy president, Andrea Orlando, earlier on Saturday said on Twitter that if a company asked the Italian government for sizeable financing, it had to bring back its legal base to Italy.

Andrea Malan, Bloomberg and Reuters contributed to this report.