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The on-going financial problems at
Pininfarina has impacted on its
jewel-in-the-crown project, the b0 electric
car that is being realised in conjunction
with French conglomerate Bolloré which will
provide the battery technology. The launch
of a working prototype at the Geneva Motor
Show tomorrow has reportedly been postponed. |
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Pininfarina
announced today that an Italian tax commission hearing
has upheld an outstanding 30 million euros VAT claim
that the Turin-based design firm says could affect its
long drawn out financial rescue plan and thus impact on
its ability to remain as a going concern.
The VAT claim
originally stood at 69.5 million euros, however the court
waived the penalties and other charges bringing it down to
30 million euros. Pininfarina has suffered a dramatic
collapse in its share price, bringing it down more than 80
percent, and the actually VAT claim is actually greater than
the current market capitalisation, further impinging on the
battered company's ability to remain solvent. "This issue
could negatively and unfairly impact the Company’s ability
to continue functioning as a going concern," the company
admitted in a statement today."
The on-going
financial problems at Pininfarina has impacted on its
jewel-in-the-crown project, the b0 electric car that is
being realised in conjunction with French conglomerate
Bolloré which will provide the battery technology. The
launch of a working prototype at the Geneva Motor Show
tomorrow has reportedly been postponed.
"With regard to the pending dispute between the Italian
Financial Administration, which was the subject of a
disclosure in the Quarterly Report at September 30, 2008,
the Company announces that, on February 26, 2009, the Turin
Provincial Tax Commission informed Pininfarina S.p.A. that
it had handed down a decision in the abovementioned tax
dispute," read the statement issued by Pininfarina in Turin
today. "In its decision, the lower court judge upheld in
part the arguments of the Turin Internal Revenue Agency,
The focus of the dispute is the contention that VAT should
have been levied on the amounts invoiced in 2002 and 2003 by Industrie Pininfarina S.p.A. (merged into Pininfarina S.p.A.
in 2004) to Peugeot Citroen Automobiles, whose tax
representative in Italy was Gefco Italia S.p.A. On December
14, 2007, the Turin Internal Revenue Agency served on the
Company two notices of assessment for additional VAT owed
for 2002 and 2003, amounting to 17.7 million euros and 11.7
million euros, respectively.
"The total amount that the Turin Internal Revenue Agency
claims is owed by the Company for the two years in question
(including taxes and penalties) is about 69.5 million euros,"
the statement continued. "On February 12, 2008, the Company challenged the notices
of assessment in a motion filed with the Turin Provincial
Tax Commission. On May 14, 2008, the Company filed
explanatory briefs underscoring the injury that could be
caused by a provisional recognition of the corresponding
liability and asking that all collection activities be held
in abeyance. On June 17, 2008, the Turin Provincial Tax
Commission granted the abeyance motions and scheduled a
merit hearing for September 30, 2008. Upon the merit hearing
being held, in view of the complexity of the issues at hand,
which warranted a more detailed analysis, the Commission
scheduled an additional hearing, which was held on November
11, 2008.
"Granting in part the motion filed by Pininfarina S.p.A.,
the lower court judge, while finding that the transaction in
question were subject to VAT, ordered that, 'in view of the
complexity of the case at bar and the difficulties in
interpreting the statute in question,' the penalties on the
abovementioned disputed VAT be cancelled. As a result, the
amount owed by Pininfarina, while the proceedings continue
at the next jurisdictional level, was reduced from about
69.5 million euros to about 30 million euros, plus interest.
"The Company, comforted by the knowledge that it has acted
properly, since the sales transactions involved items that
were transferred abroad, is confident that the position
taken by the lower court judge will be reversed, once the
appeal that it will file shortly is heard, in light of the
interpretations and arguments put forth in the decision
handed down by the lower court, which, in the opinion of the
Company and its counsel, are inaccurate both formally and
substantively. There is also a risk that this issue could negatively and
unfairly impact the Company’s ability to continue
functioning as a going concern because of its impact on the
commitments made towards the Lender Banks, with whom
Pininfarina signed a rescheduling and recapitalisation
agreement on December 31, 2008, thereby nullifying the
efforts that everyone within the Company is continuing to
make, consistent with the recently approved Industrial and
Financial Plan," the statement concluded.
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