This content is not available in your region

Stellantis ready to repay 6.3 billion euro Italy state-backed loan in advance- sources

Stellantis ready to repay 6.3 billion euro Italy state-backed loan in advance  sources
Stellantis ready to repay 6.3 billion euro Italy state-backed loan in advance sources   -   Copyright  Thomson Reuters 2022
By Reuters

MILAN – Stellantis is preparing to early repay a 6.3 billion euros ($7 billion) loan backed by Italian government its predecessor Fiat Chrysler obtained at the peak of a COVID-19 outbreak, two sources close to the matter said on Thursday.

Repaying the loan potentially frees Stellantis from a set of conditions that Rome attached to it, including preserving jobs at its Italian operations, timely paying suppliers that are crucial for local plants or financing domestic investments, in particular for electric vehicles.

The repayment is imminent, one of the sources said.

The news was initially reported by Bloomberg.

The loan, which carries a three-year maturity, was paid in June 2020 to Fiat Chrysler’s (FCA) Italian unit by the country’s top lender Intesa Sanpaolo, with credit export agency SACE providing a guarantee on 80% of its amount.

The loan stirred controversy in Italy because Fiat Chrysler, which in recent years has moved its legal headquarters to the Netherlands, was at the time working to merge with French rival PSA, in a deal which included the payment of a large cash dividend to its shareholders.

Rome, however, agreed to back the loan to assure cash to one of the country’s largest employers, at a time when the COVID pandemic and consequent lockdown measures had almost completely frozen the automotive market.

The automotive industry in Italy employs 278,000 direct and indirect workers and accounts for 6.2% of the country’s gross domestic product, according to data provided by automotive lobby ANFIA.

($1 = 0.8967 euros)

(Refiles for dropped character in headline)