- Nissan approaches lenders to seek £3.71 billion credit line to cushion the impact of Coronavirus.
- The automaker had £4.99 billion of negative free cash flow for its automotive unit in December.
- Nissan Motor to stop paying its 10,000 furloughed employees in Tennessee and Mississippi.
The Coronavirus pandemic has weighed heavily on the global auto industry. Several manufacturers have recently reported a massive decline in sales. Owing to the same reasons, sources informed on Thursday that Nissan Motor (TYO:7201) has approached major lenders to seek £3.71 billion worth of credit line.
Nissan has taken a massive hit due to the ongoing health crisis that has severely disrupted production and has brought global demand to a near halt. Considering the existing challenges of the Japanese automaker even before the outbreak, however, experts see Nissan as more vulnerable than its competitors to the economic blow from COVID-19.
Nissan’s Financial Struggle Started Before The Outbreak
The Japanese car manufacturer was already struggling to generate profits last year due to the ongoing scandal surrounding its former leader Carlos Ghosn and aggressive expansion plans which continued for years.
As per the sources, Nissan is preparing for an extended impact of the health emergency on production and demand as it requests additional funding from the lenders. The sources requested to remain unanimous as they lacked the authorization to talk to the media. The automaker’s representative couldn’t be approached for a comment.
In a recent report, the Nikkei business daily had revealed that Nissan has approached Mizuho Financial to secure financing. Other lenders named in the report included two prominent commercial banking group, and Development Bank of Japan which could offer support to Nissan Motor.
As per the company data released in December, Nissan had £4.99 billion of negative free cash flow for its automotive unit.
Nissan To Stop Paying Its Furloughed U.S Employees
Nissan had furloughed workers at its U.S plants in March but continued to pay 80% of their salaries during this period. In an announcement on Tuesday, however, Nissan said that it will no longer be able to pay its furloughed employees in Tennessee and Mississippi as it urged the workers to apply for unemployment benefits. The move is likely to affect roughly 10,000 workers of the automaker in the two states.
At the time of writing, Nissan is exchanging hands at £2.69 per share in the stock market that translates to an around 45% decline in 2020 so far.
Owing to its financial challenges last, its performance in 2019 was also downbeat with an annual loss of around 25% in the stock market.