FCA Italy, 15 billion in debt. The closure? It will then be up to the French

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-> In the midst of the fuss aroused by the decision of Fca to resort to the liquidity decree for a loan guaranteed by Sace (the state that is the taxpayers) of 6.3 billion euros for its affiliate Fca Italy, nobody has asked themselves a key question these days.

Will that money once obtained also be returned at the end of the three-year period? Or you risk doing it end of the countless public bridge loans made, just to give an example ad Alitalia, and never refunded? It may sound like a provocation, but many clues lead there.

Fiat Chrysler, the Anglo-Dutch giant with 110 billion global revenues compared to Alitalia? Hyperbole? Maybe, but let’s try to explain why. FCA, thanks to the financial ability of Sergio Marchionne, has turned from Cinderella withered the car to a global giant, which manages to produce worldwide margins of 6% on turnover, but the conglomerate 29% owned by Exor has always been, yes drag the ballast of Fca Italy, which is the old one Fiat Auto and in fact covers the European (not only Italian) market of the holding company.

John Elkann

FCA ITALY ALREADY TODAY WOULD BE INSOLVENT

The conditions of Fca Italy I’m there shaded area of ​​the Agnelli empire. For decades Fca Italy it produces fewer and fewer cars and always at a loss. Only from 2015 to 2018 (latest available balance) has accumulated a total red of 4.6 billion. In fact, i costs consistently exceed revenues although they have grown by 20% in the last 4 years. It sells at higher prices, but also costs rise dramatically. In fact, if he did not have the internationalized “mother” behind him (who thrives in the US from where profits come to compensate for the hole of FCA Italy) the old Fiat Auto would have been in liquidation for some time.

SUPPLIERS HAVE CREDITED FOR MORE THAN 4 BILLION

It does not produce cash, rather it burns it, it has no operating margins to repay debts. In the absence of margins, it is already facing today total debt of over 9 billion, of which over 4 billion of intragroup exposure and, however, another 4.4 billion in trade payables, just those who FCA with the request of the guaranteed loan would like to repay. With the loan 80% guaranteed at negligible rates FCA Italy obtains liquidity at low costs with an annual saving of at least 120 million per year of interest only, compared to finance themselves on the market.

manley fca

If tomorrow FCA Italy had the green light on the new credit, here it is the debt would jump to over 15 billion. A nice ballast for activities that do not produce income. It was already in conditions of poor solvency, let alone with an additional debt of another 6 billion.

Loan advocates already say, those billions are used to pay suppliers, to keep the supply chain alive. For now they are just statements. Already in the past, FCA Italy, as shown by the 4.4 billion payables with suppliers, does not seem to have been particularly attentive to its production chain. In fact, the company is financed half by suppliers and the other half by associated FCAs and parent companies. What then to keep the agonizing old Fiat alive, the Anglo-Dutch group leader is forced every two by three to recapitalize under penalty of zeroing the capital for losses.

FCA ITALY IS NOT JUST ITALY

Then it is said that FCA Italy is Italian, that the money will go to Italian plants and to safeguard factories and workers in Italy. Too bad the company name is FCA Italy and the headquarters in Turin, but the activities are varied and in a myriad of countries around Europe and the world. Only the There are about forty foreign affiliates of FCA Italy and they go from Germany, Denmark, half the EU to migrate to Poland, Morocco, Norway, Serbia and so on. Mirafiori, Melfi are only a small part of the FCA Italy universe.

Tavares PSA Manley FCA

And the worst troubles in results come from countries like Hungary, Serbia, even on the Indian subsidiary. Who said that the 6 and over billion will be destined only to Italy? So a huge injection of money to a business which historically has not been able to produce income and indeed ballast the entire Elkann empire.

THE LIQUIDITY OF 18 BILLION ELKANN HOLDS IT TIGHT IN HOLLAND

Critics point out that the group is full of liquidity in the Dutch parent company. True, Fca Nv states liquidity for the beauty of over 18 billion euros. Since Fca Italy is 100% controlled by Fca Nv, it would be enough to drop a little liquid cash by one step without asking for any loan from the state which has infuriated many observers.

But there is a but. FCA has a lot of liquidity, but also 14 billion in financial debt only, of which 4.8 billion to be repaid within this year. Liquidity is there to face the high debt. Not only the first quarter and Covid will cause the group to lose a lot and therefore better tighten the purse strings and keep the money as close as possible to the upper floors of the Elkann galaxy. The dividend from FCA 1 billion towards Exor was waived the door to the extraordinary one of over 5 billion post merger with PSA is kept open. You don’t want to give up on those.

THE NEW GROUP WILL BE A FRENCH GUIDE. FCA ITALY WILL BE THE FIRST TO BE DOWNLOADED

At the end, there is the enigma Peugeot to change the quadror. Thanks to the maxi-dividend at Exor, the French will be the new ones dominus of the group. He will command Paris, which also has shares in Peugeot. There is the French state, here a cosmopolitan multinational without a homeland, given that only bad news comes from Italy and old Europe. So far it has been pretending nothing. Perennial loss operations could not be closed in Fiat’s country of origin.

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