A rescue plan for Fiat will include a new two billion-euro syndicated loan from banks as well as a 1.8 billion-euro capital increase to be completed as early as July, newspaper Il Sole 24 Ore reported on Tuesday, according to Reuters.
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The news agency reported that Il Sole, Italy’s leading financial daily, said the plan would also extend until 2008 a three billion-euro convertible loan offered by creditor banks to the loss-making industrial group last year. Fiat declined to comment on the report.
The financial daily reportedly said the plan was backed by two leading creditors, Banca Intesa and UniCredito, which were pressing the six other banks to agree by Thursday.
That is when Fiat chief executive Giuseppe Morchio will unveil the turnaround plan that is expected to axe as many as 12,000 jobs, most outside Italy, Reuters noted.
“What’s new in the press is the two billion-euro loan. People have been expecting a capital increase of about two billion euros but another two billion euros from the loan shows Fiat’s borrowing requirements are bigger than thought,” an analyst in Milan, who asked not to be named, told Reuters.
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By GlobalDataA trader told the news agency hedge funds were selling Fiat heavily and the stock would be volatile until Thursday’s announcement. Other Italian newspapers on Tuesday said Fiat’s creditor banks were still wary of the plan, Reuters added.
