Fiat Considers Floating Ferrari to Reduce Debts

Struggling Italian carmaker Fiat is considering a part-floatation of Ferrari, as part of wider plans to increase cost-cutting and speed up the sale of assets, as it tries to reduce debt and return to profit.

Fiat shares, which hit nine-year lows recently, rose nearly two percent to 13.42 euros, but by 15:00 GMT today were down 0.4 percent at 13.07 euros, underperforming the European auto sector.

The Financial Times said today Fiat would seek 4.5 billion euros ($4 billion) in savings over the next three years after accelerating plans for restructuring and disposals.

The revised plan, which went further than an overhaul announced last December, was understood to involve an extra 700 million euros to one billion euros in cost-cutting, the FT said.

The Wall Street Journal also said today that Fiat was widening the range of assets it planned to sell, and that it would probably exceed its debt-reduction goal this year.

"We are trying to accelerate our debt-reduction programme," the WSJ quoted Fiat Chairman Paolo Fresco as saying. "That's the thing that can achieve visible results in the fastest way." A Fiat spokesman declined to comment on the figure of 4.5 billion euros in savings over three years, as reported by the FT.

He reiterated Fiat's plans to halve net debt of six billion euros by the end of 2002 via two billion euros of asset disposals and one billion euros from a capital increase.

In addition, Fiat plans disposals worth one billion euros in 2003, the spokesman said.

"The results have come short of expectations. The strategy does not change but more needs to be done to the execution," the FT quoted Fresco as saying of the company's restructuring plan.

Fiat Auto Holdings made a net loss of 1.442 billion euros in 2001. Fiat plans a 1.8 billion-euro recapitalisation of Fiat Auto which, it has said, would not require additional cash injections from Fiat and its partner General Motors GM.N .

"We are perfectly aware of these two problems -- the net debt and Fiat Auto," said the spokesman, adding Fiat would speed up asset sales and address Fiat Auto's profitability problem.

The group has a put option - exercisable in 2004 - to sell 80 percent of the division to General Motors, which paid $2.4 billion for an initial 20 per cent stake two years ago. "It is a contingency and no-one wants to use it," Fresco told the FT.

He also hinted Fiat would explore other options to cut debt, including a part-flotation of sports car unit Ferrari, as well as Comau, its tooling arm, the newspaper reported.

Fiat is planning to raise revenues from services from 15 billion euros to almost 25 billion euros by 2004, mainly from expansion in energy and insurance.

It might also move production of its Punto small cars from its Mirafiori plant in Turin to lower-cost factories in central and eastern Europe, the FT said. However, the Fiat spokesman said the Punto would continue to be built in Turin.