Fiat SpA (F), the Italian carmaker which controls Chrysler Group LLC, fell in Milan trading after a newspaper report that the country’s market regulator is investigating the size and purpose of the company’s cash pile.
Fiat fell as much as 4 percent, the worst performer both in Italy’s benchmark FTSE MIB (FTSEMIB) Index and in Bloomberg’s Europe Autos (BEAUTOS) Index. The stock was declining 3.4 percent at 2:18 p.m., giving the company a market value of 5.4 billion euros ($7 billion).
Market regulator Consob is investigating the size and the use of Fiat’s cash, Italian daily Il Messaggero reported today, without citing anyone. A Consob spokesman declined to comment. Fiat, based in Turin, said in a statement that it’s not “aware” of any investigation by Consob on alleged irregularities of its cash position,
The Italian carmaker’s total available liquidity rose to 22.7 billion euros at the end of the second quarter from 21.4 billion euros at the end of March. Chief Executive Officer Sergio Marchionne said on a conference call with analysts July 31 that he wants to keep an “abnormally high” level of liquidity “in the foreseeable future” to weather the crisis in Europe.
“We regularly receive information requests from Consob, including on cash,” Fiat said today. “Any insinuation that Fiat doesn’t have the cash declared in its financial publications is false.”
Marchionne said July 31 that Fiat will wait for “some clarity and some resolution” of Europe’s debt crisis, which is compounding slumping car sales, before bringing cash to normal levels. The executive, who plans to combine the two manufacturers to boost sales to more than 100 billion euros by 2014, is relying on profit from Auburn Hills, Michigan-based Chrysler as Fiat struggles to end losses in Europe.
Marchionne has said that Fiat may use its cash to finance the acquisition of the remaining stake in Chrysler. Fiat now owns 58.5 percent of Chrysler. Marchionne said in a speech Sept. 24 that Consob sent 19 letters to Fiat from April 2010 to October 2011 to get financial details of Fiat’s investments in Italy, which prompted the carmaker to suspend any communication on the so-called Fabbrica Italia plan.
To contact the reporters on this story: Tommaso Ebhardt in Milan at firstname.lastname@example.org