As the first exercise date for the disputed 'put' option, that could force GM to by Fiat Auto, finally arrived, Fiat announced that they would wait until the mediation process is completely exhausted before considering whether to activate the clause.

This gives GM and Fiat a window of a further nine days in which to discuss and resolve the option. It was signed by the two carmakers in 2000, and controversially allows Fiat to force the American giant to purchase the 90 percent of the Italian industrial conglomerate's automotive division that it does not already own.

Scheduled to come into force last January, the two sides agreed to push the 'put' option back for a year while discussions aimed at resolving it continued. However, the appointment of the Sergio Marchionne into the driving seat at Fiat last year has seen the 'tough talker' come out fighting, determined to resolve its validity once and for all.

Fiat Group CEO Sergio Marchionne reiterated in this morning's statement that the 'evolution' of the relationship with GM would have no bearing on the company's financial performance this year, which is expected to be in line with forecasts, while he also squashed recent speculation that up to three Italian factories could face the axe.

A new blackout has been imposed by the two firms in recent days, although rumours swirl that a deal is on the cards. Most observers expect GM, itself struggling to cope with huge financial losses from its European carmaking division, along with rising healthcare costs in the US, to end up paying Fiat a lump sum to release them from this obligation, along with a more favourable adjustment being made to the strict terms of their Powertrain joint venture.
 

At present the balance in the Powertrain equation is regarded by onlookers as being heavily stacked in GM's favour, and Fiat in particular, want to be able to strike up others deals, something that is currently precluded by its terms. GM for their part, continue to strongly refute the validity of the 'put' option, citing a recent recapitalisation programme that saw their stake in Fiat Auto halved to 10 percent, along with the part sale of Fidis, the profitable financial arm, as both having contributed to invalidating the option.

Fiat Spa released the following statement in Turin early this morning:

"The mediation process initiated by General Motors on December 16th, 2004 pursuant to Section 10.08 of the Master Agreement will end on February 1 st, 2005, as agreed between the parties. Fiat has reaffirmed its views that it does not consider the sale of certain financial activities of Fiat Auto and the recapitalization of Fiat Auto Holding B. V. to be violations of the Master Agreement, and as such that the put option it holds on its Auto business is an important asset for Fiat, and is valid and enforceable in accordance with its terms.

"Although the put option is exercisable on January 24th, 2005, Fiat has decided to await the completion of the mediation process. As a result, Fiat will be in a position to exercise the put option from February 2nd, 2005 through to July 24th, 2010.

"With regard to the industrial alliances between GeneraI Motors and Fiat, the parties continue to work on the optimisation of the current arrangements for the benefit of both parties. "The evolution of the relationship with General Motors is not expected to negatively impact on the Group's ability to reach its financial targets for 2005, 2006 and 2007 which have been previously communicated" said Fiat CEO Sergio Marchionne. "Furthermore, as previously stated, no plant closings in Italy are foreseen in its current development plans for Fiat Auto."