File picture: Reuters.
File picture: Reuters.

Renault finalises 5 billion euro state-backed loan

By Staff Reporter Time of article published Jun 3, 2020

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Paris - Renault has finalised a 5 billion euro (95.5bn) loan from with the French government, strengthening the carmaker's finances in the wake of the coronavirus pandemic which has ravaged the global motor industry.

Renault said that the credit facility carried a guarantee from the French state - which owns a 15% stake in Renault - of up to 90% of the total amount borrowed.

Renault also said in a statement that the loan would help finance the company's liquidity requirements.

The carmaker announced last week plans to cut about 15 000 jobs worldwide, including 4600 in France, where the company will seek voluntary departures and use retirement schemes.

The announcement sparked weekend protests at some factories, including at Maubeuge in northern France, although Renault's chairman Jean-Dominique Senard has pledged the site will not be closed.

Renault has acknowledged that its global ambitions had been unrealistic.

The company will also shrink production and restructure French plants as it pressed the reset button and sought to banish the spectre of Carlos Ghosn. It also plans to discontinue some slow-selling models, including the Scenic and Espace MPVs and the Talisman flagship saloon.

Faced with a slump in demand that has been exacerbated by the coronavirus pandemic, Renault has detailed plans to find 2 billion euros (R38.2bn) in savings over the next three years.

"We thought too big in terms of sales," said interim Chief Executive Clotilde Delbos, adding the company was "coming back to its bases" after investing and spending too much in recent years.

The French carmaker was under pressure even before Covid-19 hit, posting its first loss in a decade in 2019, and has said nothing would be "taboo" as it reviews its business.

It plans to trim its global capacity to 3.3 million vehicles in 2024 from 4 million now, focusing on its most profitable models and areas such as electric cars while freezing manufacturing expansion in countries like Romania.

Reuters

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