(Adds Capitalia and Intesa details)
By Gianni Montani and Paola Arosio
TURIN/MILAN, June 25 (Reuters) - Fiat's main creditor banks have agreed to help underwrite a 1.8 billion-euro capital increase, part of a latest rescue plan the industrial group is due to unveil on Thursday, financial sources said.
Sanpaolo IMI , UniCredito , Intesa and Capitalia would back the sale of new Fiat shares to raise vital cash, the sources told Reuters on Wednesday, hours before Fiat's new CEO was due to unveil a turnaround plan.
But other financial aspects of the cost-cutting plan, believed to include a new loan worth two billion euros, had not yet been agreed by the banks, which are already heavily exposed to the loss-making group.
The banks came to Fiat's aid in 2002 as it fell deeper into the red and gave the carmaker, once Europe's biggest, a three billion euro loan to help tackle lower car sales and rising debts.
One of the sources said UniCredito had agreed to join a pool of banks guaranteeing the capital hike as part of a wider deal that would include changes to the 2002 convertible loan.
That loan is due to expire in 2005 and the banks have been keen to extend its maturity to avoid the possibility of having to convert the debt into equity at prices well above today's market value, which puts Fiat's worth at 4.2 billion euros.
Under the deal, the eight creditors could have to buy large stakes in Fiat as early as mid-2004 after the Turin-based group failed to keep its investment grade credit rating and was cut to "junk" by all three major ratings agencies.
Newspapers have said Fiat might offer the banks a discount on the strike price or extend the conversion date to 2008.
Two other financial sources told Reuters that Sanpaolo IMI, which is one of Fiat's oldest banking allies, and Capitalia had only agreed to the capital increase idea but had not blessed other financial aspects of the turnaround programme.
"When enough information is made available, the necessary considerations will be made," one of the sources said.
Newspapers have said Fiat has asked its creditors for another two billion euros via a new syndicated bank loan as well as extending the three billion euro loan.
Sanpaolo had been considered the most hesitant of the carmaker's creditors over the turnaround plan.
The agreement on Wednesday of its executive committee to guarantee the sale of new Fiat shares raised the probability that the capital increase would be announced along with industrial aspects of Fiat's new plan on Thursday.