Italy Government has approved a decree offering state guarantees for a 6.3-billion euro ($7.1 billion) loan to Fiat Chrysler‘s Italian unit.
The State Treasury announced this on Wednesday, paving the way for the largest crisis loan in Europe to an automaker.
The formal announcement follows an endorsement by the country’s audit court and brings to an end a lengthy approval procedure for the loan, which has drawn criticism in Italy.
By providing state support, Rome “aims to preserve and strengthen the Italian automotive supply chain,” Economy Minister Roberto Gualtieri said in a statement.
FCA’s Italian division has tapped Rome’s COVID-19 emergency financing programs to secure a state-backed, three-year facility to help it weather the crisis triggered by the coronavirus pandemic. The aid will also help Italy’s broader car sector, in which about 10,000 businesses operate.
The loan will be disbursed by Italy’s biggest retail bank Intesa Sanpaolo, which has already authorized it pending the approval of guarantees the government will provide on 80 per cent of the sum through export credit agency SACE.
The request for state support sparked controversy because FCA is working to merge with French rival PSA and because FCA’s holding company is registered in the Netherlands.
FCA’s global brands include Fiat, Jeep, Dodge and Maserati.
Gualtieri said FCA would have to meet commitments on investments and jobs, but declined to say whether the Treasury had imposed conditions affecting FCA’s planned 5.5 billion euro extraordinary dividend, a key element in the merger with PSA.
Italian politicians have called the dividend into question, although it should be compatible with the terms of the financing because it is not due until 2021 and would be paid by FCA Italy’s Dutch parent company, Fiat Chrysler Automobiles NV.
FCA, whose stock fell 4.4 per cent to 8.665 euros on the Milan bourse, had no immediate comment.