Stellantis ready to prepay €6.3bn Italian state-guaranteed loan – sources

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Workers install a flag with the logo of Stellantis, the world’s fourth largest automaker which begins marketing in Milan and Paris after Fiat Chrysler and automaker Peugeot PSA complete their merger, at the main entrance to the FCA Mirafiori plant in Turin, Italy, January 18, 2021. REUTERS / Massimo Pinça

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MILAN, Jan 27 (Reuters) – Stellantis (STLA.MI) is set to prepay a 6.3 billion euro ($7 billion) Italian government-backed loan its predecessor Fiat Chrysler obtained in height of the COVID-19 outbreak, two sources in the question said on Thursday.

Reimbursing the loan potentially releases Stellantis from a set of conditions Rome has attached to it, including preserving jobs in its Italian operations, timely payment of suppliers crucial to local factories, or funding domestic investments, especially for electric vehicles.

Reimbursement is imminent, one of the sources said.

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The news was originally reported by Bloomberg.

The three-year loan was disbursed in June 2020 to the Italian unit of Fiat Chrysler (FCA) by the country’s main lender, Intesa Sanpaolo (ISP.MI), the credit agency at the SACE export offering a guarantee on 80% of its quantity.

The loan sparked controversy in Italy because Fiat Chrysler, which in recent years moved its headquarters to the Netherlands, was at the time working to merge with French rival PSA, in a deal that included the payment of a large cash dividend to its shareholders. .

Rome, however, agreed to back the loan to provide liquidity to one of the country’s biggest employers, at a time when the COVID pandemic and resulting lockdown measures had almost completely frozen the car market.

The automotive industry in Italy employs 278,000 direct and indirect workers and accounts for 6.2% of the country’s gross domestic product, according to data provided by automotive lobby ANFIA.

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($1 = 0.8967 euros)

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Reporting by Giulio Piovaccari and Valentina Za; Editing by Bernard Orr

Our standards: The Thomson Reuters Trust Principles.

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