Relief is in sight for debt-ridden German car parts manufacturer Schaeffler.

The family-owned firm has received a 12 billion euro ($17 billion) lifeline from five banks, securing its future for the medium term.

The banks that offered to refinance the credit are Commerzbank, Dresdner Bank, UBS, Royal Bank of Scotland and Unicredit.

Deal is called a 'milestone'

The deal will extend credit lines in two tranches, one for 4 ½ year maturity, and one with six-year maturity, and will be implemented "in several stages," Bloomberg news service reported Schaeffler management as saying.

Schaeffler CFO Klaus Rosenfeld referred to the financing agreement as a "milestone" that would allow Schaeffler to continue developing. Simultaneously, he said, the deal fulfills a "prerequisite" that allows Schaeffler to continue with a possible merger with Continental.

Power-struggle amid takeover

Family-held Schaeffler ran into hot water when it made a hostile bid to take over the equally indebted German auto parts maker Continental. Its aim was to challenge Robert Bosch GmbH as the world's top producer of car parts. Schaeffler now controls more than 90 percent of Continental stock.

The bid sparked a leadership dispute between the two companies. On August 12, Continental said its chief executive officer and chairman will leave their posts. Schaeffler manager Elmar Degenhart will now take the helm of Continental.

Continental share prices rose on the deal.

jen/AP/dpa

Editor: Susan Houlton