Debenhams has extended its credit facility to buy the ailing department store chain time to finalise its financial restructuring plans.

The department store retailer has agreed an additional 12-month rolling credit facility with its key lenders which “provides £40m of increased liquidity headroom”.

The retailer has said that the credit extension “will act as a bridge to facilitate a broader refinancing and recapitalisation”.

Debenhams said it plans to conclude its refinancing plans by the end of this financial period.

The retailer’s extended credit facility also contains provision for a step up in pricing during the retailer’s second financial quarter.

Chief executive Sergio Bucher said: “Today’s announcement represents the first step in our refinancing process.

“The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams.”

The department store retailer has also signed a supply chain partnership with Li & Fung for the sourcing of its own-brand lines.

“The partnership agreement we are announcing today with Li & Fung will be a key part of our turnaround plan,” said Bucher.

“It gives us access to state-of-the-art technology in the LF Digital platform, providing end-to-end visibility across our supply chain. This will help us anticipate and respond more quickly to trends and our customers’ preferences, as well as delivering better quality product.”