Schaeffler has reached an interim financing agreement with creditor banks to secure its liquidity until the beginning of 2010, according to a report in the daily Die Welt.

The article says the banks want to keep Schaeffler solvent in order to have time to negotiate a new financing package.

No details were available on the concessions and guarantees Schaeffler is providing the banks, reported Die Welt.

Last year Schaeffler borrowed EUR16bn to get control of Continental. Since then the recession has squeezed Schaeffler’s earnings and its ability to service its debt, prompting the firm to appeal for state aid from the German government.

Schaeffler has said it needs about EUR6bn in capital, and to raise the amount it has said it is prepared to sell a stake to outside investors while also asking the government for temporary financial support.