(Bloomberg) -- Fiat Chrysler Automobiles NV is in talks to obtain a state-backed credit line of about 6.3 billion euros ($6.8 billion) to strengthen the carmaker’s financial buffer against the steep downturn caused by the coronavirus, according to people familiar with the matter.
Fiat’s local unit is discussing the facility with Intesa Sanpaolo (OTC:ISNPY) SpA, which is the lead lender, the people said, asking not to be named because the matter is private. Sace SpA, Italy’s trade-credit insurer, will provide a public guarantee for 80% of the amount, they said.
The guarantee would need to be granted by a decree of the Finance Ministry, the people added.
Representatives for Fiat Chrysler, Intesa and Sace declined to comment.
The Italian-American carmaker is seeking to conserve cash after burning through $5.5 billion in the first quarter while its North American plants were shuttered and new-car demand stalled. Fiat Chrysler and French peer PSA Group decided earlier this week to scrap the 1.1 billion-euro dividends that each agreed to pay as part of their merger agreement, citing the negative impact of the coronavirus pandemic.
The Fiat Chrysler loan would be the largest financing guaranteed by a European government during the pandemic after Renault (PA:RENA) SA’s 5 billion-euro deal last month.
Last month, Italy approved measures to spur liquidity, including a package of 200 billion euros of state guarantees for loans to larger companies through Sace.
Fiat Chrysler has already raised almost 10 billion euros in lending to manage through the crisis. It earlier took out a new, 3.5 billion-euro loan from, and drew down 6.25 billion euros from an existing revolver.
MF Milano Finanza reported earlier on the guarantee.