Two financial statements released by TK Aluminum in recent days confirm that Fiat Group is set to repurchase the remaining assets of the aluminium components manufacturer that it sold almost five years ago.

Then the business, which was part of the Group's Teksid division and which manufacturers cylinder heads, cylinder blocks, transmission cases and suspension components, was in good shape and Fiat collected 460 million euros from an investor consortium. Since then the profitable TK Aluminum business has racked up losses, most recently 67 million euros during the first three quarters of 2006 (its last reported period) and has divested itself of assets in places such as Poland and China in an effort to reduce exposure. Employee numbers have dropped to around 1,000 now.

TK Aluminium has two key plants in Italy which are regarded as being vital to the smooth running of Fiat's vehicle manufacturing operations and repurchasing the struggling company ensures no interruptions to production will occur, a problem that has hit Fiat output over the last year, most notably when wage issues at outside supplier CF Gomma slowed production of the Grande Punto a year ago. Overhauling Fiat's complicated relationship with its suppliers has been a key part of CEO Sergio Marchionne's strategy.

TK Aluminum - Statement (02.08.2007)

Teksid Aluminum Luxembourg S.à r.l., S.C.A. (the “Company”) announced that on August 2, 2007 it commenced a solicitation of consents from each holder of its outstanding 11⅜% Senior Notes due 2011 (the “Senior Notes”) pursuant to a consent solicitation statement dated August 2, 2007 (the “Statement”), to implement proposed amendments to the indenture governing the Senior Notes (the “Indenture”). The consent solicitation will expire at 10:00 a.m., New York City time (3:00 p.m., London time), on August 8, 2007, unless extended or earlier terminated (the “Expiration Date”). Adoption of the proposed amendments and execution of a supplemental indenture giving effect to the proposed amendments (the “Supplemental Indenture”) requires the receipt of consents of at least a majority of the then aggregate outstanding principal amount of Senior Notes (the “Requisite Consents”) on or prior to the Expiration Date.

Noteholders who consent at or prior to the execution of the Supplemental Indenture may revoke their consents at any time prior to the execution of the Supplemental Indenture, but not thereafter. By delivering their consents, Noteholders are consenting to: (i) allow the sale of Teksid Aluminum S.r.l. and, indirectly, its subsidiary Teksid Aluminum Getti Speciali S.r.l., (the "Fiat Sold Companies") to Fiat Powertrain Technologies S.p.A.(the “Fiat Sale”) pursuant to an agreement dated July 25, 2007 (as such agreement may be amended in accordance with the terms of the Statement); (ii) allow the repayment or settlement of certain intercompany obligations, including the obligations owed by the Company and TK Aluminum-Luxembourg Finance S.à r.l. to the Fiat Sold Companies and the obligations owed by the Fiat Sold Companies to certain of the Company’s indirect subsidiaries organized under the laws of France; (iii) permit the transfer of the quotas held by the Company in Teksid Aluminum Getti Speciali S.r.l. to Teksid Aluminum S.r.l.; (iv) extend the time by which an offer to purchase Senior Notes with the proceeds of the sales of each of Teksid Aluminum Poland Sp. z o.o., the Company’s indirectly held minority equity interest in Nanjing Teksid Aluminum Foundry and the Company’s equity interest in Cevher Dokum Sanayi A.S. is to be made to no later than October 15, 2007; and (v) extend the time by which an offer to purchase Senior Notes with the proceeds of each of the Fiat Payment (as defined in the Indenture) and the Escrow Amount (as defined in the Indenture) is to be made to no later than ten (10) business days after receipt of such payments, but in no event prior to October 15, 2007.
 

As soon as the Requisite Consents are obtained, the Company intends to execute the Supplemental Indenture.

TK Aluminum - Statement (03.08.2007)

Teksid Aluminum Luxembourg S.à r.l., S.C.A. (the “Company”) announced that on August 3, 2007 it amended its consent solicitation statement, dated August 2, 2007 (the “Statement”). The Company announced that on August 3, 2007 it entered into Amendment No. 1 to the Fiat Sale Agreement (“Amendment to the Fiat Sale Agreement”) with Fiat Powertrain and, as a result of corresponding revisions, entered into Amendment No. 1 to the Escrow Agreement (“Amendment to the Escrow Agreement”) with the other parties thereto. Capitalized terms used but not defined herein shall have the meanings set forth in the Statement.

As previously disclosed in the Statement, in connection with the Fiat Sale Agreement, the Company executed the Escrow Agreement, which provides that the Escrow Fiat Payments shall be held in escrow for a period of up to 18 months from the closing of the Fiat Sale and in accordance with the terms of the Fiat Sale Agreement and the Escrow Agreement. The Amendment to the Fiat Sale Agreement (and Amendment to the Escrow Agreement) reduce the amount of the Escrow Fiat Payments from €5,000,000 to €2,000,000, with the remaining sum of €3,000,000 of the Fiat Payments to be paid by, or on behalf of, Teksid S.p.A. (a Fiat affiliate) to the Company at closing of the Fiat Sale. The Amendment to the Escrow Agreement also provides that in the event that the closing of the Fiat Sale does not occur and the Fiat Sale Agreement is terminated or terminates pursuant to its terms, the Company’s rights, interests and claims with respect to unpaid portions of the Fiat Payments, including amounts that would have been paid by Teksid S.p.A. to the escrow agent, or the Company, as applicable, in the event of the Closing, shall remain in full force and effect as against Teksid S.p.A., Fiat S.p.A. and any other party from which the Company may seek relief in relation to the Fiat Payments.

In addition, pursuant to the Fiat Sale Agreement (and Escrow Agreement), the Escrow Fiat Payment may be released prior to 18 months from the closing date of the Fiat Sale upon certain events of release. The Amendment to the Fiat Sale Agreement (and Amendment to the Escrow Agreement) amend such events of release to include the date on which all transactions, receivables and indebtedness between, to or from the Fiat Sold Companies, on the one hand, and the Company’s indirect subsidiaries organized in France (the “French Entities”), on the other hand, required to be settled pursuant to the Fiat Sale Agreement are settled either (x) as set forth in specific transaction steps attached to the Fiat Sale Agreement or (y) in cash or by set off based on principles of applicable law.

Accordingly, upon consummation of the Fiat Sale and, assuming settlement of such transaction, receivables and indebtedness pursuant to (a) such transaction steps or (b) such payment in cash or set off, the escrow agent is obligated to release the remaining €2,000,000 of the Escrow Fiat Payment to the Company. Accordingly, the Company is hereby amending the Statement to incorporate the additional items herein, including disclosure in respect of the Amendment to the Fiat Sale Agreement and Amendment to the Escrow Agreement, and all references to the Fiat Agreement and Escrow Agreement in the Statement shall be deemed to refer to such Agreements, as amended thereby or as otherwise contemplated by the Statement.