Developments re Fiat, Fiat Auto and GM

["Daniel Devaney" <ddevaney@xxxxxxxxx>]

It's been a while since I've seen a posting on the GM/Fiat saga.

A.  General Motors Corporation ("GM") filed its Form 10-Q last Friday, August
8.  The 10-Q describes GM's investment in Fiat Auto Holdings, B.V. ("FAH").
From 2000 until sometime after April 23, 2003, FAH was owned, 80% / 20%, by
subsidiaries of Fiat S.p.A. ("Fiat") and of GM.  GM previously reported that
FAH is the sole stockholder of Fiat Auto S.p.A. which owns and operates the
global automotive group of Fiat (other than the Ferrari, Maserati and Iveco
businesses, which are held separately by Fiat).  According to its website,
Iveco "is one of the leading international manufacturers of commercial
vehicles and diesel engines."  The 10-Q includes the following information:

     1.  REDUCTION IN OWNERSHIP.  GM failed to participate in, and does not
plan to participate in, a recapitalization plan in which Fiat participated by
contributing 3 billion euros that was used by FAH to repay inter-company debts
owed to Fiat or its affiliates.  "Due to Fiat's participation in the
recapitalization, and GM's non-participation, Fiat has reported that GM's
interest in FAH has been reduced from 20% to 10%."

     2.  FIAT'S PUT OPTION.  "As discussed in GM's December 31, 2002 Annual
Report on Form 10-K, the Master Agreement provides that, from January 24, 2004
to July 24, 2009, Fiat may seek to exercise a put option (the 'Put') to
require GM to purchase Fiat's FAH shares at fair market value. Whether and
when Fiat may seek to exercise the Put is unknown, although Fiat, has recently
stated in its 2002 Annual Report on Form 20F, filed with the U.S. Securities
and Exchange Commission, that it views the exercise of the Put only as a
secondary possibility. Fiat also stated in its Form 20F that it believes that
the put is enforceable in accordance with the terms of the Master Agreement.
GM believes, however, that whether the Put could ever be exercised is subject
to the possibilities that it could be affected by subsequent agreements of the
companies, it could be non-exercisable under other provisions of the Master
Agreement, it could be unenforceable by reason of actions Fiat has taken or
may take, or Fiat may choose to not exercise the Put."

B.  Fiat's Form 20-F (filed June 30, 2003) has a relatively clear description
of the "industrial alliance" with GM, including the master agreement that
initiated the alliance in 2000 and resulted in (a) GM purchasing a 20%
interest in FAH and (b) Fiat purchasing approximately 5.4% of GM's $1-2/3 par
value common stock (that Fiat sold in December 2002).

GM's 10-Q:
http://www.sec.gov/Archives/edgar/data/40730/000004073003000104/final10q08070
3.txt
GM's 10-K:
http://www.sec.gov/Archives/edgar/data/40730/000004073003000054/complete10k.t
xt
Fiat's 20-F:
http://www.sec.gov/Archives/edgar/data/842317/000095012303007704/y87767e20vf.
htm

Aloha,
Dan in Honolulu

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