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Banks 'back Fiat share deal'
MILAN, Italy (Reuters) -- Italy's Fiat has agreed with creditor banks to carry out a capital increase worth up to three billion euros ($3.24 billion) as part of a plan to turn around its struggling car arm, newspapers said on Sunday. The capital increase, valued at between 1.7 and 3.0 billion euros in different reports, would be guaranteed by Fiat's main creditor banks if minority investors did not take part, Corriere della Sera and Il Sole 24 Ore reported. Fiat shares halved in value in 2002, hurt by Fiat Auto's losses and the group's high debts, and last week they fell to near 20-year lows on worries about a capital increase to dig Europe's once biggest carmaker out of its crisis. Fiat on Saturday met the heads of its main creditor banks -- Sanpaolo IMI, Capitalia, UniCredito and Intesa -- to thrash out plans for Fiat Auto. The long-expected capital increase plan, to be confirmed at a February 28 Fiat board meeting, could be accompanied by the sale of key Fiat assets like insurer Toro and aviation engine-maker Fiat Avio worth three billion euros. On Friday, French aerospace group Snecma and Italian defence firm Finmeccanica confirmed their interest in Fiat Avio, worth an estimated two billion euros. Il Sole said potential buyers of Toro included Munich Re and France's Axa plus Italian insurers Unipol, Cattolica Assicurazioni and Ras, which is controlled by Germany's Allianz. Another potential source of funding is General Motors Corp, which already owns 20 percent of Fiat Auto. Fiat has reportedly asked GM for cash in return for scrapping or delaying an option which could require GM to buy the remaining 80 percent of Fiat Auto from next year. After Saturday's meeting with the banks, Fiat said the terms of its agreement with GM remained valid but could be changed. Fiat Chairman Paolo Fresco was believed to be planning to meet GM this week, some newspapers said over the weekend. The creditor banks, which now have almost as much influence over Fiat as its founding Agnelli family, have begun to soften opposition to changing the GM option, Il Sole said. Umberto Agnelli, head of the Agnelli family which owns about 30 percent of Fiat, took part in Saturday's meeting. He is set to become Fiat's chairman soon, when Fresco retires. Newspapers said Agnelli had confirmed to the banks that a planned 250 million-euro capital from a family holding would be pumped into Fiat Auto, a move which could be followed up by more cash from other family holdings.
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