MILAN — Fiat Chrysler agreed to a new credit facility with two banks, at a time when major carmakers are having to shut down plants, losing revenue as demand slumps in the wake of the coronavirus.
Most of FCA’s plants around the world are currently idled 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.
Fiat Chrysler said the credit facility would be available “for general corporate purposes and for working capital needs” at the group and that it was structured as a “bridge facility” to support 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.
The facility can be drawn in a single tranche of 3.5 billion euros ($3.8 billion), with an initial 12-month term which can be extended for further six months. It adds to existing credit facilities worth 7.7 billion euros, including lines for 1.5 billion euros that the company has started to draw down, FCA said.
FCA is in merger talks with Peugeot owner PSA to create the world’s fourth-biggest carmaker. The deal is expected to be finalized by the first quarter of next year.
Equita analyst Martino De Ambroggi said that, based on his new assumption of a 10 percent drop in global auto sales this year, the crisis triggered by the coronavirus would impact the merged automaker’s free cash flow by over 5 billion euros.