Roberto Colaninno, the Italian entrepreneur who engineered the hostile takeover of Telecom Italia four years ago, has proposed to Fiat’s creditor banks an ambitious $US8 billion plan to rescue the Fiat group, The New York Times (NYT) reported this week, along with numerous other newspapers.

The NYT said the proposal, still only in broad outlines, calls for a group of investors led by Colaninno to put $2.5 billion to $3 billion into Fiat, with the company raising an additional $4 billion through divestitures.

The plan also envisions a swap with General Motors, which owns 20% of the Fiat Auto division, under which GM would be released from a requirement that it acquire the 80% it does not own, in exchange for GM’s joining a capital increase at Fiat Auto, the newspaper added.

The New York Times noted that, if the Colaninno group is successful, it would effectively mean that the Agnellis, for more than a century the uncrowned industrial monarchs of Italy, would at best have to share control of the Fiat conglomerate with other Italian investors, most notably Colaninno.

The NYT said the proposal has been outlined to Fiat’s major creditor banks, which concluded a $3 billion convertible loan arrangement with Fiat in May, and to the government of Prime Minister Silvio Berlusconi.

According to the NYT, Colaninno and his advisers had not yet approached General Motors and it was also unclear what the reaction of the Agnelli family, Fiat’s biggest shareholder, would be.

The newspaper said Fiat and Colaninno, the former chief executive of Olivetti, have declined to comment on reports of the plan but one Fiat executive said, “Ultimately, it is all feasible,” adding, “There is one clear point: Colaninno has the money.”

The NYT said that, under the proposal, Colaninno and a group of fellow investors would take the banks’ liabilities into a new company while additional money, roughly $4 billion, would be raised by Fiat in a sale of assets.

The newspaper said that General Motors would be offered a release from the purchase requirement in exchange for a participation in the capital increase for Fiat Auto. In all, the fresh capital for Fiat would total roughly $8 billion.