MILAN - Shares in Fiat fell to fresh 18-year lows on Monday on concerns about a looming capital hike and a lack of progress in talks with General Motors.
At 1135 GMT, shares in the loss-making carmaker were down 1.8 percent at 6.05 euros after hitting 5.88 euros, lows unseen for more than 18 years. The stock underperformed a 0.7 percent fall in the DJ Stoxx index of European carmakers.
Fiat approved in February an up to five billion euros ($5.52 billion) recapitalization for the holding that controls its cash-bleeding Fiat Auto arm and said it would stump up three billion euros immediately by cancelling inter-company loans.
Media have reported that Fiat has asked GM, which holds a 20 percent stake in Fiat Auto and is facing an option to buy the remaining 80 percent from 2004, for up to two billion euros.
But GM's Chief Executive Rick Wagoner told Reuters last week the world's largest carmaker -- battling its own financial problems -- had still not decided whether to take part.
"There is no clarity about the capital increase and the situation with GM. The time is working against Fiat and the stock is likely to fall to five euros," said a trader.
Umberto Agnelli, Fiat's new chairman, said last week the group planned to stay in cars, saying he did not think Fiat would exercise the put option with GM in the near term and hoped never to exercise it at all.
Many analysts have said Fiat's best hope is to sell Fiat Auto, which made a record operating loss of 1.34 billion euros in 2002, and go ahead with a revival plan that includes slashing jobs and wooing back buyers with 20 new models over three years.
Instead, Fiat has put two of its crown jewels for sale, insurer Toro and aviation unit Fiat Avio, which was far and away the group's most profitable subsidiary last year with an operating margin of 13.7 percent.
"They are selling jewells that generate cash to invest in auto business and instead hold a black hole that within two years will eat up all the proceeds from asset sales," said another trader.