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EDITIONS
 Monday, 20 January, 2003, 22:24 GMT
Fiat considers company split
Italian entrepreneurs Emilio Gnutti, left, and former Telecom President Roberto Colaninno
Emilio Gnutti and Roberto Colaninno are possible investors
Fiat, the struggling Italian carmaker, has said it is considering splitting into two or more separate companies and looking at ways to refinance its ailing auto business.

The news came as Fiat dented investor confidence once again with earnings below expectations.

Chairman Paolo Fresco said the group was looking at "various plans to recapitalise our core businesses, starting with Fiat Auto but not only Fiat Auto".

The debt-laden carmaker is in the middle of a controversial restructuring, involving thousands of jobs cuts, in a bid to stem losses at its Fiat Auto division.

Rescue plans

Fiat admitted after the market close in Milan, that its Fiat Auto division - which makes the Lancia, Alfa Romeo and Fiat brands - had recorded losses of 200m euros in the final three months of 2002.

The initial optimism about the stock is fading because there is still no clear industrial plan

Giulio Brunetta, Alpa Adria Gestioni

This was nowhere near the break-even level hoped for earlier in 2002 although it was a substantially smaller loss than that recorded earlier in the year.

Nonetheless, the figure takes Fiat's total losses for 2002 to 1.4bn euros (930m), more than twice the 549m euros (364m) loss recorded in 2001.

The group has been at the centre of a number of alternative rescue plans, including suggestions that the Italian entrepreneur Roberto Colaninno is preparing to offer a financial aid in return for a place on the board.

The proposal has been welcomed by the Italian government but met with opposition from Fiat's founding family.

La Familigia

Spin-offs are being considered but only in order to bring more financial resources into the businesses

Paolo Fresco, Fiat chairman

The Agnelli family, which still own 30% of the carmaker, said earlier this month that the group would continue with its existing restructuring plan, which includes closing factories and laying-off over 8,000 staff.

But the job losses have met with widespread protests throughout Italy.

The family is now expected to meet on Friday to discuss its stance on Fiat.

Mr Fresco said on Monday: "It is true that spin-offs are being considered but only in order to bring more financial resources into the businesses so that they can increase their plans."

Fiat's shares closed down 5% on Monday as investors anticipated the disappointing figures.

The stock had been enjoying a rebound at the start of the year on hopes of a turnaround plan, after losing more than half its value last year following rising debt and flagging sales.

But traders said doubts remained about the company's future:

"The initial optimism about the stock is fading because there is still no clear industrial plan," said Giulio Brunetta, a fund manager at Alpa Adria Gestioni.

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