Fiat Anticipates Changes in GM Deal

Fiat on Saturday raised the possibility of changing a key agreement with General Motors Corp that allows the Italian industrial group to sell the remaining 80 percent of its loss-making car arm to the U.S. automobile giant. In a statement after a meeting with creditor banks, Fiat said the basic points of the 2000 accord with GM "are still valid."

But Fiat also said "possible future developments of the situation of the group with particular reference to the relationship with General Motors," had been discussed with the banks during the three-hour meeting.

Any "concrete elements" would be communicated to investors immediately, the statement added.

Fiat in 2000 sold 20 percent of its car division Fiat Auto to GM and secured an option to sell the rest from 2004, a prospect which is unlikely to be welcomed by the Detroit carmaker given the slump in Fiat's car sales.

However Fiat executives have reportedly considered cancelling or delaying the option in return for cash from GM to help a turnaround plan for Fiat Auto.

Fiat's creditor banks requested Saturday's meeting to clarify recent contacts between the group and GM.

The prospect of Fiat giving up the chance of selling the remaining stake of Fiat Auto to GM has alarmed the banks, which consider the option to be a crucial get-out clause for the group.

Umberto Agnelli, head of the Agnelli family which controls Fiat, took part in Saturday's meeting with the group's leading creditor banks: Sanpaolo IMI, Capitalia, UniCredito and Intesa. Sources from the banks declined to comment on the meeting.

Agnelli is widely expected to become Fiat's chairman soon, replacing Paolo Fresco who said he will retire, and in the past suggested that the group might have to sell Fiat Auto to focus on other businesses ranging from power to insurance.

But a plan by an Agnelli holding company to raise 250 million euros via a capital increase has been widely seen as a sign of the family's intent to spend money on turning around the car arm rather than sell it. In its statement on Saturday, Fiat also said it was making progress with its plan to raise cash by asset sales to help finance the turnaround at Fiat Auto.

On Friday, French aerospace group Snecma and Italian defence company Finmeccanica confirmed they were interested in buying the group's aviation unit Fiat Avio, estimated to be worth about two billion euros.