ANGLO IRISH Bank and lenders to the Quinn Group have agreed the terms of a deal to lower the debt on the business to €475 million from €760 million.

The changes, which will be voted on by creditors, reduce the group’s annual interest bill to €40 million from €60 million. The Quinn Group is the industrial conglomerate formerly owned by Seán Quinn and his family.

The fresh restructuring means that Anglo, a 75 per cent shareholder, will have more debt to be paid off before recouping value from the recovery of the group.

In the new deal, Anglo has agreed to waive a veto stopping the sale the Irish businesses within five years. An existing veto protecting the group’s 1,100 Irish jobs has been amended, preventing any buyer of these businesses laying off more than 10 per cent of staff.

The group’s new management, led by chief executive Paul O’Brien, last month reduced projected earnings for 2011 from the previous management’s estimate of €115 million to €85 million due to difficult trading conditions.

This forced the lenders to revisit the original restructuring deal.

“The reality is that the business could not have afforded a €60 million interest cost. What we have now is a proper restructuring,” Mr O’Brien told The Irish Times.

The deal protected 1,100 Irish jobs, he said. The group employs 2,600 in the manufacturing of glass, radiators, plastics and packaging and construction materials.

The group owes €1.3 billion to banks and bondholders, while Anglo is owed almost €2.9 billion by the Quinn family.

In the original restructuring in April, Anglo and the lenders moved €511 million of the debt – known as the “tranche C” debt – from the manufacturing company to the shareholder firm taken over by Anglo and the lenders.

This was to be repaid from the sale of Quinn assets, including hotels, and from future earnings in the manufacturing business.

The remaining €760 million – the “tranche A” debt – was left with the manufacturing company.

Anglo and the lenders have now agreed to put to a vote a proposal to reduce the tranche A debt to €475 million and increase the tranche C debt to €796 million.

Creditors will vote on a “company voluntary arrangement”, which if approved by 75 per cent by value, will bind all creditors to the deal. The vote will take place within the next three weeks.

About 10 creditors out of a group of between 50 and 60 hold more than 75 per cent of the debt. They include fund investors in distressed debt, Strategic Value Partners and Silver Point Capital, and banks Barclays, KBC and Danske.

The deal must be agreed by the end of the month as it is linked to the sale of Quinn Insurance, previously in the group, to US insurer Liberty Mutual and Anglo.

Mr O’Brien said “trading conditions across Europe are tough but we have stabilised the business”.

The group has hired consultants to assess whether to sell or work with a partner to complete a half-built chemical plant in Germany.