A consortium of 16 banks has extended KarstadtQuelle a credit line of more than €1.75 billion ($2.82 billion) over a three-year period.

The company intends to use the funds to drive its restructuring process. The next step is a capital increase, due to be decided on Monday.

"The banks have signed the deal," said KarstadtQuelle spokesman Jörg Howe on Friday.

Previously, the company only had guaranteed financing through the Bayern LB and ABN Amro-led consortium until the end of this year.

Reservations overcome

Within the consortium, there were initially reservations about the deal, voiced mainly by the Norddeutsche Landesbank and the Landesbank Baden-Württemberg. They were later brought back on board by the other consortium members.

The agreement on a credit line for KarstadtQuelle is of enormous significance to the company's future development. Company shareholders are meeting in an extraordinary general meeting in Düsseldorf on Monday to decide on a €500 million capital increase -- also necessary for the company's restructuring.

Industry insiders report that KarstadtQuelle is also negotiating with further possible money lenders such as Goldman Sachs, to secure extra elbowroom for the company's financial future.

Right road to recovery

KarstadtQuelle's restructuring plans have already been given the blessing of consultancy firm Roland Berger, which has said the company is "on the right path."

A further step will involve the naming of a chief restructuring officer, who will be tasked with implementing KarstadtQuelle's recovery plan. Among other measures, the plan foresees the sale of 77 of the company's 181 department stores and all of its specialty stores.