MILAN — Fiat Chrysler Automobiles is close to securing a 6.3 billion-euro ($6.9 billion) credit facility as Italy’s biggest retail bank, Intesa Sanpaolo, is expected to give conditional approval at a board meeting on Tuesday to a state-guaranteed loan, according to people familiar with the matter.
The loan would be Europe’s biggest government-backed financing to an automaker since the start of the coronavirus pandemic.
Top executives from Fiat Chrysler and Intesa discussed terms over the last few days and have reached an agreement, said the people, who asked not to be named because deliberations are not public.
While Intesa’s approval is a crucial step, the financing needs a sign-off from trade-credit insurer Sace and by the Italian government.
Spokesmen for both Fiat Chrysler and Intesa declined to comment.
The state-guaranteed loan is designed to bolster the domestic auto industry by directly channeling resources to FCA’s suppliers. The credit facility under discussion would be for FCA’s Italian unit, which last year lost about $1 billion before taxes.
Car sales in Italy plunged 98 percent in April and FCA’s plants were mostly shuttered during the nationwide lockdown in March and April.
In the envisaged deal, Italy’s top lender would lead a three-year loan facility to help finance the manufacturer’s business in the country, FCA said in a statement earlier this month.
Sace would guarantee 80 percent of the amount through a mechanism that would need final approval by the finance ministry.
Automakers have been among the hardest-hit industries during the COVID-19 crisis, with factory shutdowns and cratering sales in markets from China and Europe to the U.S.
FCA burned through $5.5 billion in the first quarter, and the company and French peer PSA Group earlier this month scrapped a plan to pay out 1.1 billion euros in dividends as part of their 2019 merger agreement.
The new financing plan would “provide further support to some 10,000 small and medium enterprises in the automotive supply chain in Italy,” FCA said in its May 16 statement.