Italian put-on

14 March 2003 By Rob Cox Follow @rob1cox

The US carmaker’s 10K filing, suggests Fiat might never or may be unable to exercise its right to sell Fiat Auto. And if it were forced to do so, GM is not committing itself to funding Fiat Auto’s ongoing liabilities.

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General Motors, in a 10K filing with the Securities and Exchange Commission, cast doubt on Fiat's ability to force the US carmaker to acquire the 80% of the Italian group's moneylosing car business, Fiat Auto (FAH).

In the filing published late Thursday, GM said it is "uncertain" as to whether Fiat could force it to buy Fiat Auto under an agreement the two companies reached in 2000, because "it could become nonexercisable under other provisions of the master agreement, it could be rendered unenforceable by reason of actions Fiat may have taken, or Fiat may choose to not exercise the put."

In addition, GM said: "If GM were to acquire Fiat's FAH shares and thus become the sole owner of Fiat Auto, GM would decide what, if any, additional capitalization would then be appropriate for Fiat Auto. Specifically, if Fiat Auto were to need additional funding, GM would have to decide whether or not to provide such funding and under what conditions to provide any funding.

"Unless FAH or Fiat Auto were subject to liquidation or insolvency, FAH's consolidated financial statements would be required for financial reporting purposes to be consolidated with those of GM. Any indebtedness, losses and capital needs of FAH and Fiat Auto after their acquisition by GM are not presently determinable, but they could have a material adverse effect on GM."

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