The President of Piedmont Enzo Ghigo has presented an ambitious proposal to Fiat and its associated auto sector industries, which would see a new private equity fund established to turn debt into capital.

His project would see a privately-raised equity fund established, with a planned lifespan of eight to ten years, that would offer, companies in the automotive sector across the Piedmont region, firm financial resources, as well as possibly taking on certain established debts from Fiat. The regional state budget, known as Finpiedmonte, would take a 'frontline role' in this new proposal, allowing debt to be immediately turned into equity capital, to give Fiat breathing space during their restructuring process.

"The Fiat management expressed their appreciation for the new proposal, which can also reinforce the established system for car part suppliers as well as promoting their development," said Enzo Ghigo at a press conference, where he was also joined by the budget sponsor, Guido Crosetto.

The proposal would include as well a 'closed fund' that would acquire the existing credit of a defined number of industrial companies, which would be able to present 'trustworthy' future business plans. These businesses would then undertake a consistent capital increase entirely underwritten through the debt being turned into capital. "The result of the operation," detailed Crosetto, "would be an increase in social capital and thus in the company's strengths, an improvement in net assets and debt levels, easing of credit assessment, and the possibility of implementing newly projected development plans."
 

During the proposed eight to ten year timescale of the fund's life it would become a shareholder in the companies it invested it, even to the point of being a majority one. At the end of the programme's life, the company's management would be offered the chance to buy out the fund's shareholding, or have input into any sale to a potential third party.

The fund would work side-by-side with existing and planned new government initiatives, and Ghigo was keen to emphasise that this was not a political stunt, especially with elections due across Italy this year. "This is not an electoral proposal," the Piedmont President said. "It is a concrete and serious proposal that will give breathing space and a real, genuine recovery capacity to the automotive sector in Piedmont. Fiat's management and the central government have been informed, and today, both banks, banking foundations and investment trusts will also be informed, and starting today we expect to begin with arranging constructive contributions and not merely talking, as we aim to realise this project.

"Piedmont cannot live without the auto sector and we have always supported it. Last Friday, with the new decree on competitiveness issued, the government has promised to recognise the use of deferred layoffs for Fiat's associated industries. This is very good news for the present and our proposal will now to allow the sector to look ahead positively in a concrete manner," concluded Ghigo.