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, Bloomberg and Reuters reported.
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 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 next week.
FCA, which has its legal headquarters in the Netherlands, runs several plants in Italy and may qualify for the government program, which offers more than 400 billion euros worth of liquidity and bank loans to companies hit by the pandemic.
Companies using the program for state guarantees on loans must refrain from approving 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, while saying the tie-up to create the world’s fourth-largest automaker remains on track to close before the end of next year’s first quarter.
FCA is in talks with Italian lender Intesa Sanpaolo over the loan, reports said.
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 Italian Finance Ministry, the people said.
The loan also must be approved by Intesa Sanpaolo’s board.
Representatives for FCA, Intesa and Sace declined to comment.
Italy, hard hit by the virus outbreak, is trying to prop up its battered economy with a second stimulus package worth 55 billion euros.
The loan would be the largest financing guaranteed by a European government during the pandemic after Renault’s 5 billion-euro deal last month.
FCA has already 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.
Bloomberg and Reuters contributed to this report