The Italian government has approved guarantee for a $7.1 billion (6.3 billion euros) loan to Italian-American automaker Fiat Chrysler Automobiles NV (BIT: FCA). The government approved a decree offering a state guarantee to the company’s Italian unit.
This will go down on record as the largest ever loan granted to a Europe based car manufacturer.
The decree was signed by Italy’s audit court marking the end to long and highly contested process to get the loan approved by the Italian government. Last week, Italy’s economic minister Roberto Gualtieri, endorsed the loan.
Among the reasons why the deal faced multiple hurdles, the holding for Fiat Chrysler is registered in the Netherlands and speculations has it that the automaker is in the process of finalizing on a merger deal with France based PSA (PEUP).
Following economic distortion caused by the pandemic, Italian government decided to bail out financially strained companies across the country granting them three years state backed loans. The car industry in Italy has over 10,000 businesses, undoubtedly the industry is among the most affected by the pandemic pushing the Italian unit of Fiat Chrysler to tap into the government bailout.
Italy’s largest retail bank, Intesa Sanpaolo (ISP) will disburse the loan after the government has provided 80% of the loan through export credit agency SACE.