ROME: Italy's government has approved a 6.3bil euro (RM30.3bil) loan to Fiat Chrysler Automobiles' (FCA) Italian division - making it the largest bail-out for a European carmaker.
The official announcement brings to an end a lengthy approval procedure and has subsequently attracted a great amount of flak from Italians.
According to Italian Economy Minister Roberto Gualtieri, the bail-out loan for FCA is to help "preserve and strengthen the Italian automotive supply chain".
The company, which owns global brands such as Fiat, Jeep, Dodge and Maserati, has effectively tapped into Italy's Covid-19 emergency financing schemes to secure a state-backed three-year facility to help it weather the crisis triggered by the virus.
In addition, the aid will also help Italy’s automotive sector where roughly 10,000 businesses operate.
FCA’s chief operating officer (Europe, the Middle East and Africa) Pietro Gorlier said that the entire fund received will go into keeping the company afloat while they progressively shift their efforts towards electric and hybrid mobility.
The fund will be disbursed by Italy’s largest retail bank Intesa Sanpaolo, which has already authorised it pending the approval of guarantees the government will provide on 80% of the sum through export credit agency SACE.
The request for state support has sparked controversy due to FCA being currently engaged in talks about a merger with French carmaking rival Groupe PSA which owns brands such as Peugeot, Citroën, DS, Opel and Vauxhall.
The Italian CEO added that the company would have to meet commitments on investments and jobs, but declined to say whether the Italian Treasury had imposed conditions affecting the company's planned 5.5bil euro (RM26.5bil) 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 being due only in 2021 and would only be paid by FCA Italy’s Dutch parent company, Fiat Chrysler Automobiles NV.
