Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Fiat Chrysler's loan request raises doubts about $6 billion dividend

Stock Markets May 19, 2020 14:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: LA Auto Show in Los Angeles 2/2

By Giuseppe Fonte and Giulio Piovaccari

ROME/MILAN (Reuters) - Italy could look into Fiat Chrysler's (MI:FCHA) planned 5.5 billion euro (5 billion pounds) payout as part of its merger with Peugeot after the Italian-American carmaker asked for a 6.3 billion euro state-backed loan, a senior government source said.

The possible payment of such a large dividend at a time when the coronavirus crisis has left cash-starved manufacturers pushing for support from an already heavily indebted government has sparked criticism within the ruling coalition.

"In the talks with the group, the special dividend is not an item being discussed at the moment. But, if you ask me whether the government will set no conditions in the near future, I'd reply that it's too early to say," the government source told Reuters on Tuesday.

Fiat Chrysler (FCA) said last week its Italian division was working with the government to obtain 80% state guarantees on a 6.3 billion euro three-year loan facility to help it weather the pandemic.

The loan would be part of more than 400 billion euros Italy is making available to businesses hit by the pandemic. According to the scheme, companies accessing state guaranteed loans cannot pay dividends until the end of 2020.

Taking the loan would not legally bar FCA from distributing the extraordinary dividend as the payment is not expected until 2021 and would be made by its parent company Fiat Chrysler Automobiles NV in the Netherlands.

"Most of us oppose the payment of the maxi-dividend by FCA," a prominent source of the ruling 5 Star Movement told Reuters.

Former industry minister Carlo Calenda, who is now part of the opposition, also said on Twitter that FCA would not need the state-backed loan if the special dividend were not paid.

However, Economy Minister Roberto Gualtieri said on Monday that the prospective merger made supporting FCA financially even more important, in an apparent sign that the government favours the plan to create the world's fourth-biggest carmaker.

"What the government has done and will continue to do is to provide liquidity in order to anchor FCA in Italy," he said.

FCA and Peugeot's owner PSA (PA:PEUP) this week scrapped their planned ordinary dividend payouts on 2019 results, worth 1.1 billion euros for each company, due to the pandemic.

As part of the binding merger agreement, FCA is also due to pay shareholders a special dividend of 5.5 billion euros just before the closing of the deal, which is expected before the end of the first quarter in 2021.

Fiat Chrysler's loan request raises doubts about $6 billion dividend
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email