Agnelli Family Plays Down New Fiat Rescue Talk

A member of the Agnelli family, which controls ailing Italian automaker Fiat, yesterday sought to play down speculation about a new plan to rescue the industrial group said to have been put together by Italian entrepreneur Roberto Colaninno.

Amid reports that Colaninno had presented an eight billion-euro ($8.4 billion) plan to the Agnellis, as well to Fiat's creditor banks and the government, Umberto Agnelli told Italian news agency Ansa that money-losing Fiat was sticking to its existing restructuring program, which involves thousands of layoffs and asset sales.

"I appreciate the interest that has been shown but I would like to recall once again that there is only one plan approved by the board and agreed with the creditor banks and the government," Agnelli was quoted as saying. "I confirm the full support of the shareholders to the Fiat managers who are involved in the steady implementation of this plan."

Umberto Agnelli heads the holding companies of the Agnelli family, which controls Fiat with a combined stake of roughly 30 percent.

"The absolute priority for Fiat Auto today is to work calmly to advance the tough industrial program underway," he told Ansa.

Italian newspapers have reported the outlines of the purported plan by Colaninno to pump eight billion euros into Fiat's battered car division, Fiat Auto, making him a shareholder in the group on a level with the Agnelli family, which has controlled Fiat for over a century.

Colaninno would contribute one billion euros of his own cash, with the rest raised by sales of key assets and possibly some money from Fiat's partner, General Motors Corp., in return for Fiat dropping its option to sell the rest of ailing Fiat Auto to GM from next year.

On Wednesday, the New York Times said Colaninno had proposed the plan to Fiat's creditor banks and quoted an unidentified Fiat executive as saying the idea was "feasible."

Speculation about a move by Colaninno was heightened when Prime Minister Silvio Berlusconi on Monday said the government welcomed signs that Italian businessmen were interested in Fiat. Berlusconi has repeatedly said he wants Fiat to remain Italian.

Colaninno masterminded a 30 billion-euro takeover of Telecom Italia in 1999, only to be ousted - with lots of cash in hand - in a raid by rival investors in 2001.

A spokesman for Colaninno said on Monday he would not confirm or deny the reports of the plan for Fiat, when the group's share price hit a nearly 20 year-low. Fiat suffered a credit rating cut to "junk" status last week by U.S. ratings agency Moody's, which cited high debts and falling sales at Fiat Auto.