(Rewrites throughout)
By Gianluca Semeraro
MILAN, Dec 19 (Reuters) - Fiat SpA said on Thursday it had agreed to sell a majority stake in its finance arm Fidis, slicing 6 billion euros ($6.1 billion) of its gross debt pile but leaving it still several billion shy of a fast-approaching debt cut target.
A Fiat spokesman told Reuters that Italy's biggest industrial firm had agreed in principle to a deal to sell consumer finance unit Fidis to creditor banks Capitalia , IntesaBCI , Sanpaolo IMI and UniCredito .
The spokesman did not elaborate on the terms of the deal, saying full details would be given early in the New Year.
But financial sources have said the sale of the 51 percent stake, which is part of a sweeping do-or-die restructuring plan, would lighten the carmaker's gross debt by around 6 billion euros to around 26.8 billion euros.
A financial source on Thursday said the Fidis deal would allow Fiat to remove Fidis debt from its 2002 balance sheet, helping it meet goals set with the banks.
Fiat shares closed up 0.4 percent on Thursday, narrowly outperforming a 0.4 percent European sector slip and after having had more than 50 percent wiped off their value so far this year as Fiat car sales have plunged.
Fiat, which has seen its production blighted by waves of strikes over plans to ease its costs by more than 8,000 layoffs, has to hit a gross debt level of 23.6 billion euros before its full-year results are posted at the end of February.
If it did not, it would risk a debt downgrade to "junk" which would drive up its cost of borrowing significantly and send investors not allowed to hold sub-investment grade bonds scurrying to dump their holdings.
Media reports have said the current restructuring plan does not go far enough to meet the debt deadline and the Turin-based group will need to sell some or all of its profitable insurer Toro to meet the target.
Fiat Avio, which makes airplane engine parts, could also be on the block.
On Tuesday, Fiat's new Chief Executive Alessandro Barberis said the company planned to stick to targets agreed with creditor banks "even if we have to generate more cash."
Analysts say the best way for Fiat to pull back into profit would be to sell Fiat Auto to the world's largest automaker, General Motors Corp. , which already owns 20 percent of the cash-bleeding car unit. Fiat has a "put" option to sell GM the rest in 2004.
The U.S. giant is widely reported to be cool on the prospect of adding Fiat to its loss-making European operations.
($1=.9769 Euro)