Shares in the department store chain are up, but analysts say its future is still in the balance

Hopes for the survival of Debenhams have risen after the department store confirmed it had agreed a £40m lifeline from lenders and a deal with a major supplier to improve the quality of its own-label clothing.

The company said it had secured an additional 12-month credit facility with its existing lenders as “a bridge” towards longer term refinancing.

Sergio Bucher, the chief executive, hailed the new 12-month credit facility, which was first flagged in the Guardian, as a “first step in our refinancing process”. The company’s share price closed up 1p at 4p.

“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,” he said.

Analysts said the deal with supplier Li & Fung, a Hong Kong-based conglomerate that makes clothing for many British retailers, was also a significant step.

“It may be seen as confirmation that a very serious global sourcing operator does not regard Debenhams as a write-off,” said Tony Shiret, a retail analyst at Whitman Howard in a note.

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