ITALY/GERMANY: A mediation process to settle a row over whether Fiat has the right to sell its ailing Fiat Auto car unit to General Motors reportedly has ended in stalemate and Fiat is sticking to its view that it could exercise the put from Wednesday.
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Reuters said investors had bet GM and Fiat would reach an out-of-court settlement over the put and that the US giant would pay about €1.8 billion ($US2.4 billion) to get Fiat to drop the option.
In the past, Fiat chief executive Sergio Marchionne has said he could exercise the put option to force a quick valuation of Fiat Auto and the put, not necessarily as a prelude to a sale, the news agency noted.
“Fiat reasserts its view that the put option is valid, enforceable in accordance with its terms and an important asset for the group. The put is exercisable from today,” Fiat said in a statement cited by Reuters.
Separately, according to Reuters, General Motors reiterated on Wednesday its position that the disputed put option was invalid.
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By GlobalData“All of our options are still available to us — that has not changed — and we will pursue those options at the appropriate time,” a spokesman for GM Europe told the news agency after Fiat reaffirmed its right to exercise the put option.
According to another report, David Lee, a bond fund manager at Gestnord in Milan, told the Associated Press on Wednesday: “This is a game of chicken. But I think everybody knows that underneath Fiat holds the best cards.”
“I think they’re doing the right thing,” he reportedly added. “They have nothing to lose.”
The Fiat statement:
Fiat-GM: End of “Mediation” Process
The mediation process, initiated by General Motors on December 16th, 2004 pursuant to Section 10.08 of the Master Agreement, ended on February 1st, 2005, as agreed between the parties.
In spite of the attempts to resolve the dispute on the alliance’s outstanding financial and industrial issues, no agreement has been reached between Fiat and General Motors during the mediation period.
Fiat reaffirms its views that the sale of certain financial activities of Fiat Auto and the recapitalisation of Fiat Auto Holding B. V. did not violate the Master Agreement, as General Motors claims.
As a result, Fiat reasserts its view that the put option is valid, enforceable in accordance with its terms, and an important asset for the Group.
The put is exercisable from today, February 2nd, 2005 through to July 24th, 2010.
