Lenders to Kellwood Company have agreed an eleventh-hour deal to defer payment on $140m in bonds, in a move which means the apparel maker avoids having to file for bankruptcy.

In a last-minute decision its bondholders, including Deutsche Bank, agreed to swap the bonds for new senior secured notes with better terms which mature in 2014.

The deal "not only creates a better deal for our bondholders," but also "strengthens our financial position," said Kellwood president and CEO Michael W Kramer.

"This will let us continue to build on the operational improvements we have made to date and take advantage of opportunities to grow our brands and our business."

The possibility of Kellwood, one of the largest apparel makers in the US, filing for bankruptcy arose last week after its largest bondholder Deutsche Bank decided to reject the swap offer.

In response the company, whose brands include Vince, Phat Farm and Sag Harbor, negotiated a forbearance agreement with its bankers to give it time to explore its options.

Kellwood, which is owned by private equity firm Sun Capital Partners, has stressed throughout that the problems are the result of the debt maturity and not its business performance, and that shipments to customers have continued on time.