General Motors believes a put option held by Fiat – which could force the US car maker to buy out the Italian group’s car division – may not be applicable, GM’s chief executive was quoted as saying on Friday, according to Reuters which noted that Fiat executives have recently said they have no intention of exercising the option which begins in 2004.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Reuters said GM chief executive Richard Wagoner was quoted by Il Sole 24 Ore newspaper as saying “there are some doubts about whether the put option can be validly exercised for a series of reasons which have not yet been revealed”.
Wagoner also reportedly told the paper that GM had not made any provisions in its financial accounts for the put option nor for the possibility of raising its stake in Fiat Auto.
Reuters noted that, in a March filing with the US Securities and Exchange Commission, GM said the put could be “rendered unenforceable by reason of actions Fiat may have taken”.
Fiat CEO Giuseppe Morchio in July was quoted as telling investors he thought GM believed the option was invalid due to legal problems, the report added.
Reuters noted that GM bought 20% of Fiat Auto in 2000 but its stake was diluted to 10% earlier this year when the US giant opted not to put forward its share of a €5 billion ($US5.89 billion) recapitalisation of the loss-making car unit.
In an interview with an Italian newspaper published on Thursday, Wagoner said a decision by Fiat not to use the put would allow the two groups to focus more on developing their industrial alliances, Reuters said.
