Supplier Continental was expected to sign a key EUR2.5bn (US$3.60bn) loan extension on Friday, which would allow a planned capital increase to go ahead, bankers said on Friday.

Continental pledged shares in its subsidiaries and upstream guarantees to secure lenders' agreement to extend the loan by two years to August 2012, in addition to increased margins, fees and new covenants, a senior banker close to the deal told Reuters.

Deutsche Bank and JP Morgan have been appointed to lead the planned EUR1bn capital increase that will follow the EUR2.5bn extension of part of Continental's EUR11bn loan - the remainder of a EUR13.5bn loan put in place in 2007 when it bought Siemens' VDO unit, Reuters reported.