ROME (Reuters) – Italy’s Treasury has taken another step towards approving a state guarantee for a € 6.3 billion ($ 7.1 billion) loan for Fiat Chrysler FCHA.MI Italian unit, a government source told Reuters on Wednesday.
The request for state support on such a large loan has sparked controversy in Italy, as Fiat Chrysler (FCA) is legally headquartered in the Netherlands. It is also expected to pay its shareholders an exceptional dividend of 5.5 billion euros as part of a merger project with the French car manufacturer PSA. PEUP.PA.
The FCA said it has requested state support to help its national unity overcome the crisis triggered by the COVID-19 pandemic.
The Italian auditor has approved the guarantee, but it has yet to be approved by Economy Minister Roberto Gualtieri and give the green light to the country’s accounting court, the source told Reuters, asking not to be named.
The Treasury and the FCA declined to comment.
The loan has already been approved by Italy’s largest commercial bank Intesa San Paolo FAI.MI, which will finance it, and by the export credit agency SACE, through which the guarantee will be provided.
The loan is one of more than 400 billion euros that Rome hopes to make available this year to support Italian businesses, hit by one of the world’s deadliest coronavirus outbreaks.
Italian companies relying on state guarantees must refrain from paying dividends this year, while the Treasury reserves the right to ask for additional requirements.
Gualtieri said earlier this month that FCA would have to meet its investment and job commitments and face sanctions if it fails to meet them.
The source declined to say whether the Treasury will impose conditions affecting FCA’s extraordinary dividend.
As it stands, the state-guaranteed loan should not legally prevent FCA from distributing the extraordinary dividend, as the payment is not due until 2021 and would be made by its parent company Fiat Chrysler Automobiles NV to Netherlands.
Report by Giuseppe Fonte; Additional reporting by Giulio Piovaccari; Editing by Catherine Evans