New Plana Fora Fiat Cara Businessa

MILAN, Jan 9, 2003; Reuters reported that investment banker Guido Roberto Vitale has drawn up the latest in a series of plans for troubled Fiat which would see the Italian state take a stake in the group's loss-making car arm, newspapers said on Thursday.

Under Vitale's plan, the state would take 33.7 percent of a group linking Fiat Auto and Fiat's 56 percent stake in sports car group Ferrari, papers said, adding the government would likely invest via an infrastructure fund linked to the Treasury.

The shareholders in the new company -- including Fiat's creditor banks, Fiat and partner General Motors Corp. would pump five billion euros into the ailing group and then float it on the stock market, raising 1.55 billion euros ($1.61 billion).

Fiat shares fell 1.3 percent on Thursday, faring slightly worse than the DJ Stoxx index of European auto stocks.

"The spin-off is an interesting idea in that it would separate the auto unit's stock performance from the rest of the group and so create greater transparency," one trader said.

Papers said the government's stake in Fiat Auto would fall to 25 percent after the listing, with the Fiat group owning about 17 percent -- or less if it decided to get out of cars all together to focus on its publishing, energy and insurance businesses.

Vitale is an independent investment banker who has worked with the family of Italian Prime Minister Silvio Berlusconi in the past.

"I haven't presented a plan on behalf of (Economy Minister Giulio) Tremonti but I wanted to help find a way of keeping Fiat Auto Italian so we don't lose the technological and industrial history of our country," Il Sole quoted Vitale as saying.

Fiat has been dragged deep into loss as sales of its cars slump and Fiat Auto burns cash, raising the spectre that Fiat will take up an option to sell its 80 percent stake in the car unit to GM next year. GM bought the other 20 percent in 2000.

But the government wants to keep the icon of Italian post-war industry in Italian hands, spawning a spate of alternative plans for the insurance-to-energy conglomerate.

Financier Roberto Colaninno, famous for his 1999 takeover of Telecom Italia (Milan:TIT.MI - News), is penning a plan that would rework Fiat's partnership with GM which he said he would present to the Fiat board next week.

Fiat executives are due to meet creditor banks on Thursday and sources said they would discuss the banks' own plan to spin off Fiat Auto, which the Financial Times said would leave 2.0-3.0 billion euros of the division's debt in Fiat's pocket.

The FT said the banks' plan would pump two billion euros into Fiat Auto, raised from selling assets including aviation unit Fiat Avio. Fiat could then raise two billion euros via a share offer with the controlling Agnelli family playing their part.

The Agnelli's own 34 percent of Fiat, mostly through their Ifi and Ifil (Milan:IFLI.MI - News) holding companies.