UPDATE:Fiat Finalizing EUR4B Loan Details Before Demerger-Sources

25th Jun 2010 14:42

(Adds quotes, details, background) By Carol Dean and Sabrina Cohen Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Fiat SpA (F.MI) is in talks with six banks to finalize details of a EUR4 billion financing deal as the Italian industrial group prepares to split itself into two, people familiar with the situation said Friday. The talks involve a EUR1.5 billion revolving credit facility and an up to EUR2.2 billion bridge loan to a bond offer that will be issued by the Italian carmaker in coming months, the people told Dow Jones Newswires. Fiat is seeking a five-year maturity on the revolving credit facility, while banks are looking for a three-year maturity, one of the people said. "Certain details have still to be ironed out," this person said. The EUR2.2 billion bridge loan has a one-year maturity with a one-year extension option that will give Fiat time to access the bond market given the volatile conditions in the debt markets caused by sovereign debt concerns, this person said. Fiat aims to reach an agreement on the details of the refinancing by the end of June in order to announce it in July, most likely July 21 when the board of Fiat will meet in Detroit to approve first-half results. A sixth bank recently joined the talks, Royal Bank of Scotland Group PLC, another person said, confirming a report Thursday in Italy's Il Messaggero newspaper. The other banks involved in the talks are Italy's Intesa Sanpaolo SpA and UniCredit SpA, France's BNP Paribas SA and Credit Agricole SA, and Citigroup Inc., the people said. Fiat needs the financing to pay off debt expiring this year and prepare itself for the already announced spinoff plan. In the next nine months, it has EUR3.4 billion of loans, EUR500 million of bonds and EUR800 million of other debt maturing, according to Fiat's five-year business plan presented in April. The financing is therefore an integral part of its demerger plans, which will see Fiat's tractor and truck operations get put into a separate company from its car-making operations. Fiat has declined comment on the talks. -By Carol Dean and Sabrina Cohen, Dow Jones Newswires; 44 20 7842 9306; [email protected] (Gilles Castonguay in Milan contributed to this article) (END) Dow Jones Newswires June 25, 2010 09:42 ET (13:42 GMT)