Fiat Shares Drop in Restructuring News

Fiat shares fell nearly 7% in the wake of the struggling Italian auto giant’s announcement of a major restructuring, the departure of its top executive, an earnings warning and plans to raise money by issuing about $3 billion in new stock and bonds.

Facing shrinking demand worldwide and a tough economic environment, Fiat said it will spend about $700 million on a restructuring that will leave the company with a net loss for the full year.

Fiat also said Roberto Testore, the chief executive of the automotive unit, is resigning and will be replaced by Giancarlo Boschetti, the chief of Fiat’s bus and truck unit, Iveco.

The company plans to issue about $900 million in stock and offer $2.2 billion in convertible bonds. The capital increase calls for issuing three new shares for each 25 held for all categories of stock.