The European Investment Bank (EIB), the long-term financing arm of the European Union, is providing loan finance totalling EUR 95 million(1) in support of capital investment by Fabbrica Motori Automobilistici (FMA) and Teksid SpA designed to enhance production facilities for vehicle engines at FMA's Pratola Serra plant in Avellino Province and for automotive components at Teksid's Crescentino plant in Vercelli Province. FMA is wholly owned by FIAT SpA, which also has a 66.5% majority stake in Teksid, the balance of whose capital is held by the French car manufacturer, Renault.
In the course of a meeting with Fiat SpA's Managing Director, Paolo Cantarella, EIB Vice-President Massimo Ponzellini highlighted the significance of the contract signed recently with Fiat: it underscored the long-standing cooperation between the EIB and the Turin-based Group in terms of support for priority investment sharpening Fiat's competitiveness and generating job opportunities, particularly in Italy's Mezzogiorno.
The finance is directed towards upgrading the Pratola Serra plant (run by Fiat's operating subsidiary, FMA) for manufacture of a new generation of diesel engines for the Group's cars, as well as towards modernising and extending the Crescentino plant (run by Fiat's foundry subsidiary, Teksid) for production of mechanical engineering components.
This loan package follows on from a number of earlier financing arrangements concluded by the EIB with Fiat Auto, the most recent of which, concluded in December 1998, provided funding worth EUR 260 million in all. The Pratola Serra plant, operational since 1994, was designed as a pioneering integrated factory and constructed in tandem with Fiat's similarly designed Melfi plant. Both were part-financed by the EIB in 1993 and 1994 and have since come to be recognised as among the most efficient production facilities of their kind in the world.
Established in 1958 under the EU's founding Treaty of Rome, the EIB has as its remit to finance projects designed to fulfil key EU objectives, primarily in the areas of regional development, trans-European transport, telecommunications and energy networks and the environment. The Bank also operates outside the EU, underpinning the Union's development aid and cooperation policies in support of non-member countries. A non-profit-making organisation, the EIB enjoys a "AAA" rating on the capital markets where it raises its resources for on-lending to borrowers on extremely attractive terms. The Bank's shareholders are the EU Member States.The aggregate volume of Bank financing in Italy in 1999 ran to EUR 4.053 billion, over half of which (2.1 billion) targeted investment in essential infrastructure. Industry accounted for some 30% of the total lent, mainly through global loans (or credit lines) specifically geared to the needs of smaller businesses.
(1) EUR 1 = ITL 1 936.27; GBP 0.6217.