The two car makers have turned to their banks to secure much needed cash, and Fiat Chrysler (FCA) is looking at debt guarantees that the Italian government approved on Monday, April 6, to support local companies, a source with knowledge of the matter told Reuters.
FCA, whose legal headquarters is in the Netherlands, runs several plants in Italy and may qualify for the government scheme which offers more than €400 billion (US$436.3 billion) worth of liquidity and bank loans to companies hit by the pandemic, the source said, cautioning no decision had been made.
The crisis triggered by the virus has virtually erased demand for new vehicles, pushing automakers to temporarily halt most production.
In late March FCA secured a €3.5 billion credit line, with an initial 12-month term that can be extended six months. This added to existing credit facilities worth €7.7 billion euros.
The Italo-American firm, chaired by John Elkann, scion of the Italian Agnelli family, would need to cut its ordinary dividend if it decides to pursue state aid from Italy.
The emergency decree states companies looking to apply for Italy-backed loans must refrain from approving dividend payments for a year.
FCA’s decision to postpone the shareholders’ meeting to late June has analysts speculating that its ordinary dividend worth €1.1 billion could be axed or postponed.
“While the merger process is proceeding, the postponement of the AGM will raise markets’ concerns of a potential cancellation of the ordinary dividend,” said Intesa Sanpaolo analyst Monica Bosio.
Equita analyst Martino De Ambroggi echoed that the most likely scenario was “the cancellation or at least the postponement of the ordinary dividend for both FCA and PSA.”
Full Content: Reuters
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