By Gianni Montani and William Schomberg
TURIN/MILAN, Jan 23 (Reuters) - Italy's powerful Agnelli industrial clan gathered on Thursday to discuss how to tackle the gravest crisis in their century-old stewardship of Fiat .
Around 70 family members will attend a dinner in Turin which traditionally precedes the annual meeting of shareholders in the Giovanni & C. Sapa holding, the Agnellis' financial fortress from which they command Italy's largest industrial group.
Normally routine, this year's meeting on Friday has been billed as the most important since the holding was set up in 1987 to pool the ownership of the sprawling family.
Sales at Fiat's car arm Fiat Auto slumped in 2002, pushing the group into losses, raising concern about its debts and saddling Fiat with a "junk" status credit rating.
After Fiat shares sank to nearly 20-year lows in December, various local financiers floated plans for the group which involve some kind of fresh capital. Fiat is also considering a spin-off of Fiat Auto from the group's other, healthier businesses.
Speculation now centres on how much money the Agnellis -- who own about 30 percent of Fiat -- are willing to plough back into the company and which assets they might sell to raise the cash as they try to keep their hand on the reins.
"After some moments of indecision, the Agnellis have the situation back in hand," said a source in Turin where Fiat is based. "They are the ones holding the cards for the relaunch."
Also unclear is what role Fiat partner General Motors Corp. might play in a recapitalisation and whether the Agnellis would give the nod to new financial partners bringing cash.
Financier Emilio Gnutti, whose financial partners include an array of investors including leading banks and the family holding of Prime Minister Silvio Berlusconi, is seen as more palatable to the family than entrepreneur Roberto Colaninno whose plan for Fiat includes making himself chief executive.
With Honorary Chairman Gianni Agnelli, 81, suffering from prostate cancer, his brother Umberto, 69, looks placed to emerge from Gianni's shadow and take the helm.
Amid rumours of a family split, the sisters of Gianni and Umberto earlier this month publicly endorsed Umberto as the family's single representative.
Umberto recently said the Agnellis were willing to dig into their pockets to help the group and recent media reports say he could be named chairman, replacing Paolo Fresco, who has said he wants to retire in July, or as head of Fiat Auto.
"Umberto is the only family member who could realistically take over," said a financial source, adding signs of support for his nomination as chairman could emerge on Friday.
Gianni's choice of heir, grandson John Elkann, is still only in his mid-20s and too young to take the top job, most Fiat watchers say. However, reports have said Elkann could be named Fiat's vice chairman if his uncle, Umberto, gets the top job.
Friday's meeting will take place behind firmly closed doors and a hotly awaited statement is expected in the afternoon.
Fiat's creditor banks want to see whether the family will consider a spin-off of Fiat Auto. Ratings agency Standard & Poor's on Wednesday said it was waiting for news on the future of Fiat Auto before deciding whether to downgrade the group's debt rating to "junk" status, as Moody's did last month.
And private investors are anxious to see whether they will be asked to contribute to the cash injection.
"It's always been clear there was going to be a recapitalisation. How much will end up being paid by investors depends on who (the Agnellis) bring in as new partners and how much cash they provide," said Paolo Banfi, head of investment at fund management firm Euroconsult in Milan.