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Fiat's share
price was temporarily suspended yesterday after sliding by
more than 10 pct in morning trading, although CEO Sergio
Marchionne swiftly issued a statement.
Market sentiment
has been hit over the last week by the recent fragility of
the automotive sector in general, compounded when it was
announced that sales from virtually all the major brands
fell across Europe last month.
Coupled to these jitters has been a recent announcement from
Fiat that the upcoming scheduled stockholders' meeting is to
be temporarily postponed, while General Motor's dreadful
recent performance has also given rise to suggestions that
the US carmaker would be unable to make a due payment of 550
million euros, owed after the unraveling of the two firm's
former alliance. Finally, it has been widely rumoured that
Fiat is seeking to renegotiate the terms of a 3 billion euro
convertible loan, which is due to be repaid in September.
In a statement
yesterday Fiat Group and Auto Division CEO Sergio Marchionne
was quick to rebut all these suggestions, reconfirming his
belief that the stated financial targets for the 2005-07
period were all still on course to be met and that the loan
would be honoured as set out in its terms. His statement
seemed to satisfy the market, and after the early lows,
Fiat's share price recovered somewhat to close only slightly
down at 4.4 pct.
STATEMENT BY
SERGIO MARCHIONNE, FIAT CHIEF EXECUTIVE OFFICER
"Fiat Group has decided to move the date of the annual
general meeting of shareholders to the second half of June
2005 in order to bring about a thorough updating of its
corporate governance regime. As a first measure, we
anticipate that the Board will be augmented by three or four
independent directors. It will allow, at the same time, for
the nomination of directors representing qualified
minorities. The role and composition of the Audit Committee
of the Board will also be reviewed to ensure full compliance
with American based requirements of US listed companies.
"All of these measures, none of which will require a change
to the Group’s bylaws, are designed to bring Fiat Group
fully in compliance with the most recent and updated norms
of corporate governance available in continental Europe.
"Recent speculations about the fate of the 3€ billion
mandatory convertible are unfounded. The Group will not
request any modification to the terms of this instrument,
and conversion will take place, as agreed in 2002, in
September 2005. Our discussions with General Motors relating
to the conclusion of the put arrangement and industrial
alliances are proceeding well and finalization and receipt
of the remaining 550 million euros is expected no later than
May 13th 2005. |
