The latest twists in the Fiat story centre around the fate of the conglomerate's automotive interests. General Motors claims that a "put", forcing GM to buy Fiat's automotive interests in 2004, is invalid because of Fiat's recent restructuring. This financial uncertainty is leading to increased speculation that the national institution may well be saved by a government buyout.

With its financial problems spiralling ever deeper, Fiat's future is more uncertain than ever. Current speculation centres around a clause in a contract with GM, signed when the US giant bought a 20% interest in the Italian group. This clause, or "put" in industry parlance, apparently compels GM to buy the remainder of Fiat's automotive interests in 2004, should the Fiat conglomerate decide to ditch its chronically loss-making automotive unit completely.

However, GM is now contesting this clause, arguing that recent restructuring actions by the Italian group, as well as ancillary legal points, render it invalid. GM appears anxious not to be saddled with the extra burden of Fiat's debt at a time when its core US market is suffering falling sales growth and a stagnation all of its own. GM's position has lead to confusion and confrontation between the two companies, with Fiat now no longer sure of the security of its position.

At present, several of the company's creditors as well as banks such as UniCredito and Intesa are leading rescue efforts for the automotive division and are scheduling talks to commence in September regarding the possibility of additional financing, which may add new life to Fiat's efforts to remain solvent.

Fiat is keen to retain the clause with GM as an effective escape route from its financial quandary. Until then, its continued search for financing has led to speculation that its creditors will facilitate the Italian state's entry into the affair, with a government buyout on the cards. Fiat's status as a national Italian institution, and the largest private sector employer in the country is likely to lead to widespread Italian interest in keeping the company in native hands.

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