Thursday, December 24, 2009
FIAT Skips Talks with German Gov. on Opel, Disagrees with Emergency Funding
Italian automaker Fiat S.p.A, has announced that it will not attend a scheduled meeting today with the German government due to "perplexed" financial issues that came up during talks for the acquisition of GM's Opel unit. In a prepared statement, Fiat CEO Sergio Marchione said that the Italian automaker had not been informed of key financial factors and data on Opel and that the company could not take "unnecessary risks" to fund Opel on an emergency basis as requested by Berlin. However, Fiat said that the company is still interested in buying Opel and is committed to continue discussions with all parties involved in order to find a solution. Hit the jump to read the full statement from Sergio Marchione.
"The search for a partner for Opel which has been initiated by General Motors, and which has involved the German government due to the request for financial assistance, has been a complicated and uneven process," said Sergio Marchionne, Chief Executive Officer of Fiat S.p.A.
"We have been involved in these activities for a number of weeks now, and have tried to follow in a responsible manner the requests made by the various parties involved in the selection process. The issues that emerged from the last round of negotiations on Tuesday and Wednesday have left us perplexed, since we had not been advised until then of certain key financial factors and data which we consider to be essential to the formulation of a proper merger offer."
"Given the nature of the process itself and its short duration, Fiat has been unable to have full access to the financial records of Opel to determine its precise financial condition and thus properly frame a merger proposal that would be fair to General Motors as the seller and to Fiat S.p.A."
"The last round of requests which would require Fiat, among other things, to fund Opel on an emergency basis while the German government determines the exact timing and conditions of the interim financing, would expose Fiat to unnecessary and unwarranted risks."
"It is in fact unreasonable to expect, on the basis of prudent business judgment and proper governance of its affairs, that Fiat would provide funds to an organization whose financial details and position remain unknown to date. The brevity of time between the request and the date that the commitment must be made is such that proper due diligence cannot be performed."
"We remain committed to finding ways to bridge the expectations of both General Motors and the German government," continued Sergio Marchionne, "but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks. We have already offered to contribute our auto business assets to the merger on a debt-free basis and thus provide substantial, and absolutely necessary equity to the merger, but also the related cash-flow stream which will help stabilize the performance of the combined entities during the integration and restructuring process. More cannot be asked."