Fiat Chrysler agrees new $3.8bn credit facility with banks

Automotive Industry

Source: Automotive News Europe, 2020-03-26

Fiat Chrysler Automobiles said it has agreed a new credit facility with two banks, at a time when automakers are having to shut down plants, losing revenue as demand slumps in the wake of the coronavirus.

FCA said the credit facility would be available "for general corporate purposes and for working capital needs" of the group and that it was structured as a "bridge facility" to support its access to capital markets.

"This transaction confirms the continued strong support of FCA's international key relationship banks in the current extraordinary circumstances," the automaker said in a statement on Thursday 26 March.

FCA did not make any explicit link between the new facility and the impact the virus is having on the global economy.

The facility can be drawn in a single tranche of €3.5bn ($3.8bn), with an initial 12-month term which can be extended for further six months. It adds to existing credit facilities worth €7.7bn euros, including lines for €1.5bn that the company has started to draw down, FCA said.

Most of FCA's plants around the world are currently shut in response to the virus emergency.

Italian investment firm Exor, which controls FCA, said on Wednesday that the temporary closures might continue and increase depending on how the coronavirus outbreak develops.

FCA is in merger talks with PSA Group to create the world's fourth biggest automaker. The deal is expected to be finalized by the first quarter of next year.

Equita's analyst Martino De Ambroggi said that, based on his new assumption of a 10% drop of global auto market this year, the crisis triggered by the coronavirus would impact the merged automaker's free cash flow by over €5bn.

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