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FCA gets 3.8B credit from banks

Discussion in 'Rumors and General Chrysler Discussion' started by Fast Eddie, Mar 26, 2020.

  1. Fast Eddie

    Fast Eddie Valued Member
    Level III Supporter

    Jun 12, 2014
    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.
    ImperialCrown and MJAB like this.
  2. ImperialCrown

    ImperialCrown Moderator
    Level III Supporter

    Jun 8, 2008
    This is good news. I have been on pins and needles about corporate survival and the domino effect. There are an awful lot of dominos. If you aren't making money, you are losing money.
    Employee safety and health come first in any case. Be careful out there.
  3. 77 Monaco Brougham

    77 Monaco Brougham Active Member

    Jan 15, 2017
    Fingers crossed, but...for appears FCA's immediate situation might be a bit less frightening than for some of its peers:

    A short excerpt from the news article in the link reads as follows:

    The outlier in Moody’s latest report was Fiat Chrysler Automobiles NV, placed under review “with uncertain direction.” The Italian-American manufacturer faces the same daunting situation as peers, but the planned merger with PSA might potentially result in a higher rating of the combined group than Fiat Chrysler’s current standalone rating, it said.

    Auto Giants Across the Globe Warned of Coming ‘Credit Shock’ (at )
  4. sickboy

    sickboy Well-Known Member

    Feb 28, 2011
    With purchasers of new vehicles facing uncertainty, idling the plants is the best solution to keep inventories down, virus or not. A big line of credit is great, but spending tomorrow’s paycheck today is never healthy.
    As always, I hope for the best, and hope that the company makes the right bet (as to the length of the downturn), and comes out healthy
    Beentherebefore likes this.
  5. Zagnut27

    Zagnut27 Jeepaholic

    Jan 12, 2015
    It’s often very difficult to obtain credit in times of crisis or economic downturn, so having that locked up to any degree is beneficial. Good move.
    jimboy and Dave Z like this.
  6. jimboy

    jimboy Well-Known Member

    Dec 7, 2006
    There is an old business adage 'save when times are good, spend when times are bad'. As the economy begins to recover down the road, it might be a good time for FCA-BCDE to show some love to America by way of new Chrysler and Dodge product. Although I believe America will be much harder hit than first anticipated, it will also likely be the first major economy to recover, and the quickest. If they were smart, they would be getting new vehicle lines ready now, so they can be up and running real quick, when people get back to work. I work in retail and people are already suffering shopping withdrawal. The economy will come back fast, and people will want something new to buy, oh, like a big new crossover from Chrysler ( or that really nice 508 estate! ) and a sporty mid size Dodge one. Works for me!
    cdjr77, danbek and AvengerGuy like this.

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