Two sources said that later this month, Fiat S.p.A.'s lenders will syndicate 4 billion euros ($5.5 billion) of loans as the carmaker prepares to spin off its industrial units.
The insiders said that Fiat is in negotiations for a 2.4 billion-euro bridge loan which will be refinanced with a bond from the unit being separated. The loan will have a one-year term that can be extended by another year.
They also said that Fiat is seeking a 1.6 billion- euro revolving credit line. Typically, loan underwriters want to reduce the amount they provide by selling, or syndicating, the debt to a wider group of lenders.
On July 21, Fiat said that the debt will be provided by Barclays Capital Plc, BNP Paribas SA, Credit Agricole CIB, Intesa Sanpaolo SpA, Societe Generale SA, Royal Bank of Scotland Group Plc, Citigroup Inc. and UniCredit SpA.
In a revolving credit, money that has been repaid can be borrowed again but in a term loan, it can’t. Fiat, which owns 20% of Chrysler Group, is spinning off industrial units to concentrate on the revival of carmaking operations.
On Oct. 21, Fiat raised 2010 forecasts after its profit in the latest quarter had surpassed analysts' estimates on sales of Iveco trucks and Case New Holland tractors.
Fiat Industrial SpA, the new company that will merge businesses including Iveco and CNH Global NV, will be listed on the Milan exchange on Jan. 3. A Fiat spokesman has declined to make a comment on the deal. [via autonews - sub. required]