Fiat and General Motors are still in talks to resolve a row over the Italian group’s option to sell its ailing car unit to GM, even though a mediation period ended without a deal, sources told the Reuters news agency.

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“Just because the mediation has ended, it doesn’t mean there are no talks any more,” one financial source reportedly said. “The communication channels between Fiat and GM are still open.”


Reuters noted that the two companies have long been at loggerheads over the validity of Fiat’s put option to sell its car unit to GM, with GM arguing that moves made to keep Fiat Auto going through a crisis changed the company and so invalidated the put.


GM started a mediation process in mid-December to settle the spat, but the 30-day period ended at midnight last Tuesday without an agreement, the report added.


Fiat claims the put is valid and could be exercised any time from last Wednesday. The fact Fiat did not immediately exercise the put and that GM did not take the issue straight to court suggested talks were continuing to find a friendly solution, the news agency noted.

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Investors reportedly had expected GM to pay Fiat about $US2.3 billion (€1.8 billion) to annul the put so it can avoid buying another loss-making, indebted car maker while it is trying to cut costs and jobs to pull GM Europe back into profit.


Reuters said that Fiat chief financial officer Luigi Gubitosi on Friday met the group’s creditor banks in Milan but was expected to discuss strategy rather than the GM issue.


The banks reportedly gave Fiat a €3 billion loan in 2002 which can be converted into equity from September if Fiat does not pay it back or change the terms of the deal.


The option to shed Fiat Auto was seen as a key backing for the loan, bankers have said, according to Reuters.