Fiat will next week threaten General Motors with legal action as the Italian industrial group asserts its right to compel the US manufacturer to buy out its troubled car division, Fiat Auto.
Fiat will next week threaten General Motors (GM) with legal action as the Italian industrial group asserts its right to compel the US manufacturer to buy out its troubled car division, Fiat Auto.
According to , the Italian company will move to clear up the conflict with GM over whether its four-year-old "put" option, giving Fiat the right to sell its car arm, is valid. CARtoday.com reported that GM bought 20 per cent of Fiat Auto in 2000 for R24 billion in stock and Fiat has a put option to sell the rest of its embattled car division to the American multinational.
Sources at Fiat said legal action would not necessarily mean the sale of Fiat Auto, but the establishment of the right to do so, the report said, noting that GM had claimed repeatedly that the option could no longer be exercised.
The report added that it was important to Fiat to have the put option available in case the financial problems at Fiat Auto escalated further.
In turn, GM reiterated its position that the "put" can be contested because of restructuring at Fiat Auto and the capital injection of R16 billion, which was announced by the Italian Group last year.
Fiat chief executive Sergio Marchionne apparently plans to tell GM chairman and chief executive Rick Wagoner that the company will not accept another delay after the standstill agreement expires next Wednesday. Marchionne and Wagoner are due to meet in Zurich on Tuesday next week.
Original article from Car