Finally signed. After several weeks of negotiations between Renault and its banks, the Losange will be able to announce the obtaining of a loan guaranteed by the State (PGE) of 5 billion euros: the manufacturer finalized an agreement with its banks, indicates a source close to the matter, confirming information from Reuters.
This massive aid – one of the most important granted in France after the 7 billion granted to Air France -, is not a surprise. The Minister of the Economy, Bruno Le Maire, had himself indicated at the end of April that the government was ready to give his agreement to such a guaranteed loan, and the European Commission had announced in the process that it approved this exceptional public support .
No consideration
While many observers had questioned the possible counterparts to the EMP, Clotilde Delbos, chief financial officer and acting general manager, had assured at the end of April that the two subjects were disconnected. What Bercy confirms. “The EMPs have no other consideration than the payment of the dividend”, do we insist at the Ministry of Economy. “The automobile support plan may include certain environmental or social requirements. But these are two very different things. “
Like the entire automotive industry, Renault has been hit hard by the crisis. The French manufacturer had to close almost all of its factories worldwide from May 16 – they have only been restarting slowly for a few days. And sales of the Diamond collapsed (-79% in Europe in April), threatening the manufacturer of a liquidity crisis – even if it still had 10.3 billion euros available at the end of March (including 3, 5 billion undrawn lines of credit), after having burned 5.5 billion in the first quarter.
Extensive restructuring plan
“Car manufacturers pay their suppliers in two months, while they are paid immediately by their customers: however, at the end of March, supplier debts reached 9 billion euros – to be paid two months later”, explains financial analyst Gaetan Toulemonde. The EMP should allow Renault to pass the deadline. Most analysts believe that a recapitalization will not be necessary.
All manufacturers are concerned, but Renault has approached the crisis in a more difficult situation than its competitors – having even announced losses in 2019, for the first time in ten years. The three-color manufacturer is expected to announce a major restructuring plan next week, which will allow it to reduce its fixed costs by 2 billion euros by 2022.
The last arbitrations on the French industrial footprint of the group are still in progress. Small French sites, like Choisy-le-Roi, Fonderie de Bretagne or Dieppe (where the Alpine are assembled) are in the hot seat: their productions could join other factories. Finally, the Flins site, which manufactures the electric Zoes, could also stop assembling vehicles to devote themselves to other activities.
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