Auto industry big part of Italy GDP, fair to back FCA for job creation: minister

MILAN (Reuters) – The auto industry represents a significant share of Italy’s economy and it is right to support those who create jobs, Deputy Economy Minister Laura Castelli said when asked about Fiat Chrysler’s (FCHA.MI) request for state-backed loans.

The Italian-American group (FCA) said last week its Italian unit was seeking state guarantees on a 6.3 billion euro ($6.88 billion) loan facility designed to help Italy’s automotive industry weather the coronavirus crisis.

Under Italian law, companies can access state guaranteed loans if they do not distribute dividends in 2020.

The request by FCA Italy for a state-backed loan has sparked debate on the opportunity for Rome to introduce additional conditionalities.

“The automotive industry certainly represents, together with related activities, a significant share of GDP, and it is right to support those who create employment in Italy. We are thinking about it,” the minister, who is a member of the anti-establishment 5-Star Movement, told daily Il Messaggero.

FCA has entered into a binding merger agreement with French automaker Peugeot (PEUP.PA) to create the world’s fourth-largest carmaker. Both companies have said that they would not pay their planned ordinary dividend on 2019 results.

As part of the deal, which is expected to close before the end of the first quarter of next year, FCA is set to pay a 5.5 billion euro special dividend to investors.

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

Economy Minister Roberto Gualtieri said late on Monday that the prospective merger made supporting FCA financially even more important for Rome.

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

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