Schaeffler has said that it has reached a major mid-term financing deal with its creditors.

The firm – which extended itself to take control of Continental – said that the EUR12bn agreement with the five banks in Schaeffler’s lending consortium gives the group a much-needed lifeline.

“With this agreement on a financing concept, we have reached a key milestone on the way to developing the Schaeffler Group in the coming years,” chief financial officer Klaus Rosenfeld said in a statement.

“At the same time, we are fulfilling a further important requirement with this concept for a possible merger of the Schaeffler Group with Continental AG.”

The financing will come in two tranches – one covering a period of up to four and a half years, the other of up to six years.