MILAN - Industrial group Fiat, mired in losses, said on Wednesday it had not made a decision on a widely expected capital increase. One of Fiat's top bankers said a key option to sell its carmaker could yet be changed.
Fiat shares have fallen as much as 10 percent this week, hitting an almost 20-year low of 7.04 euros on Wednesday, on speculation the industrial group will have to deeply discount stock to coax investors to hand over more money.
"Regarding the rumours about a capital increase of Fiat SpA, the company confirms that no decision has been taken about such operations or about the terms of the deal," Fiat said.
A financial source has told Reuters Fiat's board would discuss a capital hike of about 2.5 billion euros on Feb. 28 as part of a plan to pump as much as five billion euros into its ailing car arm, 20 percent-owned by General Motors.
The Financial Times has reported new stock would be sold at a 30 percent to 35 percent discount to market prices.
PUT COULD CHANGE
Part of the funds could come from GM, which could be forced to buy the 80 percent of Fiat Auto it does not already own from next year in a "put" option that ratings agencies and creditors see as key to the group's valuation and future.
Fiat has been discussing changing the agreement with GM for the last few weeks, possibly asking the U.S. giant to inject two billion euros into Fiat Auto in return for delaying or scrapping the "put."
The head of creditor Intesa told reporters in Rome that the banks would be open to changing the put "if something better comes up," but warned negotiations would take some time.
Slow car sales and high cash burn at Fiat Auto dragged it to an operating loss of about 1.3 billion euros last year and forced the group into a three billion euro bank loan, thousands of job cuts and plans for 20 new car launches in the next years.