ROME -- Italy could look into Fiat Chrysler Automobiles' planned 5.5 billion euro ($6 billion) dividend payout as part of its merger with PSA Group after FCA asked for a 6.3 billion euro ($6.9 billion) 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.
FCA said last week its that Italian division was working with the government to obtain 80 percent state guarantees on a 6.3 billion euro three-year loan facility to help it weather the pandemic. The company said the loan would be to support its activities in Italy, where the it has several plants and research and development centers, directly employing around 55,000 people.
The loan would be part of more than 400 billion euros Italy is making available to businesses hit by the pandemic. According to the program, companies accessing state guaranteed loans cannot pay dividends until the end of 2020.
FCA and Peugeot maker PSA decided last week to scrap the 1.1 billion-euro ($1.2 billion) dividends that each agreed to pay as part of their agreement to merge, which the two automakers confirmed was expected before the end of the first quarter of next year.
However, as part of the tie-up deal, FCA is also due to pay to its shareholders a special dividend of 5.5 billion euros just before the closing of the merger. FCA's major shareholders are the wealthy Agnelli family.
Taking the loan would not legally bar FCA from distributing the extraordinary dividend as the payment is not expected until 2021 and the divident payment 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 in Italy's ruling 5 Star Movement told Reuters.
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 it decided not to pay the special dividend.
Economy Minister Roberto Gualtieri, who has said he backs the merger with PSA, said on Monday that FCA had to promise more investments in Italy and to avoid moving its factories outside the country if it wanted to apply for a state-backed loan.
"The government aims to preserve and strengthen Fiat's roots in Italy, as the automotive group is about to carry out its challenging merger with PSA," he said.
