ROME (Reuters) - Italy has approved a decree offering state guarantees for a 6.3-billion euro ($7.1 billion) loan to Fiat Chrysler's (FCA) (MI:FCHA) Italian unit, a source said, paving the way for the largest crisis loan to a European carmaker.
The source said Italy's audit court had signed off on the decree, in a final step of what had been a lengthy and contested process to get the loan approved. The court's approval follows an earlier endorsement by the economy ministry.
"The audit court authorized the decree," said a source close to the matter, asking not to be named because of its sensitivity.
FCA's Italian division has tapped Rome's COVID-19 emergency financing schemes to secure a state-backed, three-year facility to help the group's operations in the country, as well as Italy's car sector in which about 10,000 businesses operate, weather the crisis triggered by the coronavirus emergency.
The loan will be disbursed by Italy's biggest retail bank Intesa Sanpaolo (MI:ISP), which has already authorised it pending the approval of guarantees the government will provide on 80% of the sum through export credit agency SACE.
The request for state support has sparked controversy because FCA is working to merge with French rival PSA (PA:PEUP) and the holding for the Italian-American carmaker is registered in the Netherlands. FCA's global brands include Fiat, Jeep, Dodge and Maserati.
It was not immediately clear what conditions, if any, Italy has set as part of the guarantees and whether they would affect FCA's planned 5.5 billion euro extraordinary dividend, which is a key element in the merger with PSA.
FCA, whose shares were down 0.5% by 0908 GMT, had no immediate comment.