Fiat Says Mediation With General Motors Will End Feb. 1

ROME January 24, 2005; The AP reported that Fiat SpA said Monday that its period of mediation with General Motors Corp. will end Feb. 1, and that the Italian company will have the option to compel GM to buy its troubled auto division from the following day.

Fiat's announcement came on the day mediation over its "put option" -- through which it has the right to sell its car business to GM -- was due to end.

Fiat said it had pushed back the date "to wait for the conclusion of the process of mediation." The company said the put option is "an important instrument for Fiat, and is valid and can be exercised according to the terms agreed."

Fiat said it would be able to exercise the option beginning Feb. 2 until July 24, 2010. The option is part of a 2000 agreement that says the Italian company can legally compel the U.S.-based auto giant to acquire the 90 percent it does not already own of Fiat Auto.

Fiat rejected claims by GM that the Italian company may have breached the agreement through actions including a recapitalization of Fiat Auto Holding BV and the sale of a 51 percent stake in Fiat Auto's consumer finance division.

Taking Fiat's auto unit under its wing could be a problem for GM, which is already grappling with woes at its Opel unit in Europe.

The mediation process, in which Fiat Chief Executive Sergio Marchionne and GM Chairman and Chief Executive Rick Wagoner negotiate between themselves, began Dec. 16.

Fiat said it did not expect relations with GM to impinge on its financial targets for the next three years. The company added that it was not planning to close any of its Italian car factories.