Renault to Combat Coronavirus Crisis on 5B Euro State Backed Loan

RENAULT SA RNLSY recently finalized a credit facility agreement with a banking pool, comprising five banks — BNP Paribas, Crédit Agricole, HSBC France, Natixis and Société Générale — for a maximum total amount of €5 billion ($5.60 billion) to combat the coronavirus pandemic.

This credit facility, which might be drawn in whole or in parts, will help finance the group’s liquidity requirements to counter the rising uncertainties related to the coronavirus crisis.

Reportedly, the credit facility carries a guarantee from the French state, which owns a 15% stake in Renault, of up to 90% of the total amount borrowed. The credit facility also includes, an initial 12-month maturity, with an option to extend the maturity for an additional three-year period.

The automaker had been reeling under financial crisis even before the coronavirus outbreak. Renault had been crippled by the departure of CEO Carlos Ghosn, who was arrested in 2018 over allegations of financial misconduct. The firm delivered its worst financial performance in a decade in 2019 and the pandemic further has added to the woes. Renault’s factories in France have been shuttered since mid-March, with operations resuming only this month. The financial incentive comes as a breather for the company, which has pledged to slash costs by €2 billion to regain its footing.

Meanwhile, as a member of the world's largest car-making alliance, Renault, along with Nissan NSANY and Mitsubishi Motors, has announced several initiatives as part of a new business model of cooperation focused more on efficiency and competitiveness than on volumes.

The companies will reduce the overall number of models being sold, use shared platforms for production, and focus on their existing geographic and technological strengths. These firms are aimed at cutting costs and boost profitability amid the coronavirus pandemic. Renault plans to cut about 15,000 jobs worldwide, including 4,600 in France, where the company will seek voluntary departures and use retirement schemes.

This April, Renault announced that it will stop selling gas-powered passenger cars in China after exiting from a joint venture (JV) with Dongfeng Motor Group Co. due to dismal sales. The company will, instead, concentrate on light commercial and electric vehicles in China. Per Renault, light commercial and electric vehicles are the two main drivers for clean mobility, and will help it maximize synergies with Nissan.

Zacks Rank & Stocks to Consider

Renault currently carries a Zacks Rank #3 (Hold). Shares of Renault have depreciated 42.9%, year to date, compared with the industry’s decline of 13.6%.

Some better-ranked stocks in the same sector are Tesla, Inc. TSLA and Niu Technologies NIU, both carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Tesla have appreciated 111.1%, year to date, compared with its industry’s rise of 28%.

Shares of Niu have gained 28.9%, year to date, as against the industry’s decline of 12.3%.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Nissan Motor Co. (NSANY) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
RENAULT SA (RNLSY) : Free Stock Analysis Report
 
NIU TECHADR (NIU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research