Former Telecom Italia boss says he is preparing Fiat refinancing plan (GM spared )

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Former Telecom Italia boss says he is preparing Fiat refinancing plan

January 4, 2003





ASSOCIATED PRESS




ROME -- Italian entrepreneur Roberto Colaninno confirmed Friday he was preparing a refinancing plan for Fiat SpA that calls for him to be directly involved in management of the struggling automaker.

Fiat shares have risen over 10 percent in the past two days following reports that Colaninno, former chairman of Telecom Italia, was devising an $8 billion plan to turn Fiat around, including a $1 billion personal investment.

In a statement issued after the close of trading Friday, Colaninno confirmed a plan was in the works, although he gave few details.

"The plan, which is friendly and calls for a direct involvement of Roberto Colaninno in the company's management, will be submitted for scrutiny to Fiat's board in the next few weeks," the five-line statement said.

Earlier, Fiat had risen 1.61 percent to close at 8.64 euros ($9) in Milan trading Friday.

Fiat, Italy's largest private-sector employer, has been hit by mounting debt and falling sales. Losses at its Fiat Auto unit totaled $1.3 billion in the first nine months of 2002.

Under the reported plan, a group of investors headed by Colaninno would control a 30 percent stake of Fiat, while the company's founding Agnelli family would see its stake diluted from its current 30 percent share to about 20 percent, news reports said.

Colaninno would then raise at least $4 billion from the sale of Fiat's peripheral assets, such as a maker of airplane parts and an insurer, reports say. Those funds would be used to revitalize Fiat Auto.

Currently, General Motors Corp. owns 20 percent of Fiat Auto and can be forced to buy the remaining 80 percent in a year. One reported element of the Colaninno plan would be to release GM from that obligation.

GM spokeswoman Toni Simonetti stressed that the proposed deal would be between Colaninno and Fiat, and that the U.S. automaker preferred not to interfere. Simonetti, speaking from New York, described the proposal as "an interesting development," but noted that the details and implications were still not clear.

Colaninno engineered a stunning, $30 billion takeover of telecommunications giant Telecom Italia in 1999, only to lose it two years later when Italian tire and cable company Pirelli teamed up with a Benetton-controlled investment firm to buy an effective controlling stake in Telecom Italia.

Earlier Friday, Fiat repeated that it hadn't been presented with any new plan and that there was only one "valid" turnaround option on the table for the Turin-based company -- one that has been agreed upon with Fiat's creditor banks and the government.

The plan was approved in May, when Fiat's creditor banks put up a $3 billion loan to help the automaker stay afloat.

In a statement, Fiat said its restructuring plan was already bearing fruit, citing a "significant reduction in operating losses in the last four months" of 2002.

Fiat also said preliminary figures suggested it would cut its net debt to "noticeably" below a target agreed on with its creditor banks.

Fiat agreed to cut its net debt to no more than 3.6 billion euros ($3.6 billion) by the end of fiscal 2002. It started the year with a gross debt of 33 billion euros.

In addition to the debt target, the restructuring plan calls for Fiat to cut about 8,100 jobs, most of them at Fiat Auto -- layoffs that have sparked massive protests by Italian workers and unions in recent months.