Fiat SpA shares rose following news its automotive arm had reached an agreement with creditor banks to refinance some debt, saving Fiat from being downgraded to "junk" credit rating status.

Three main creditor banks will dole out €3 billion ($2.8 million) in loans to beleaguered Fiat Auto SpA, which is trying to keep majority control of the company in the hands of the founding Agnelli family. The family owns a third of Fiat Auto shares, but indicates it may be willing to give up strategic control to save the company, possibly to shareholder General Motors Corp.

The three banks, Banca di Roma, IntesaBCI and Sanpaolo IMI, potentially could end up with 30% ownership of the auto maker if, after three years, Fiat shareholders don’t take up their rights, reports say. The loans can be converted into Fiat shares after that time and then be offered to Fiat shareholders by the banks.

Fiat is targeting a reduction in debt from €6.6 billion ($6.0 billion) today to €3 billion ($2.7 billion) by the end of 2002.