They will swap up to 2.9 trillion won ($2.4bn; �1.5bn) in debt for new shares in SK Global - the trading arm of South Korea's third largest conglomerate SK Group.

This amounts to nearly half the company's debt.

The firm has been on the verge of bankruptcy since a $1.2bn accounting fraud was uncovered in March.

Drive for reform

"SK Global still has a long way to go before it gives the market a clear sign of survival," said Kim Jeong-pyo, an analyst with Kyobo Securities.

"But the latest creditors' move is showing the worst seems to be over."

The debt swap was agreed by a creditor steering committee and will be presented to a general creditors' meeting next week.

SK Global's fate is seen as a test of President Roh Moo-hyun's drive to reform corporate accountability at the family-run groups, or chaebols, that control most of the economy.