(Adds FCA confirmation of seeking loans, company comment, background)
MILAN, May 16 (Reuters) - Italian Prime Minister Giuseppe Conte said on Saturday that Fiat Chrysler was entitled to apply for Italy's state-backed loans because the automaker employs thousands of people in the country, even though its legal base is located abroad.
The Italian-American group confirmed on Saturday its Italian unit was working with Rome to obtain state guarantees on a 6.3-billion-euro ($6.8 billion) loan facility designed to help Italy's automotive industry, comprised of approximately 10,000 small and medium-size businesses.
The coronavirus outbreak, which has hit Italy especially hard, slammed the brakes on demand for new vehicles and forced automakers to halt most production, burning cash.
Fiat Chrysler Automobiles NV (FCA) said in a statement that talks were ongoing with lender Intesa Sanpaolo for a three-year credit facility exclusively dedicated to the group's activities in Italy.
Asked whether FCA, which has its legal headquarters in the Netherlands, could get a loan guaranteed by the Italian government, Conte said the group qualified.
"We're not talking about the parent company, we're talking about the group's companies in Italy, which employ thousands of people," the prime minister said.
FCA runs several plants and research and development centres in Italy, directly employing around 55,000 people.
In addition, over 200,000 people work in Italy's 5,500 parts suppliers and 120,000 people in car dealers and service companies, with the automotive industry accounting for 6.2% of Italy's domestic product, FCA said.
News that FCA was asking the Italian government for liquidity support had raised criticism.
The ruling party PD's deputy president, Andrea Orlando, earlier on Saturday said on Twitter that if a company asked the Italian government for sizeable financing, it had to bring back its legal base to Italy.
The scheme is part of emergency measures the Italian government is making available to the country's businesses. It offers more than 400 billion euros' worth of liquidity and bank loans to companies hit by the pandemic.
FCA said the state-backed credit facility it is seeking will have "the sole purpose of providing operational support for payments to Italian suppliers to support their liquidity and, at the same, supporting the restart of production and investment at Italian plants."
The group has gradually restarted operations in Italy since the end of April.
$1 = 0.9246 euros Reporting by Giulio Piovaccari; additional reporting by Angelo Amante; editing by Alexandra Hudson and Leslie Adler