First Milk has agreed a major refinancing deal that will give it extra cash to fund growth plans.

The three-year package, signed with Lloyds TSB and Barclays, takes its loan facility up to £130m, £30m more than was available through its previous providers.

The loan is linked directly to the value of the co-operative's debtors and inventory and would allow it to borrow against its existing assets, said Nick Robson, regional director at Lloyds TSB Commercial Finance.

As well as giving First Milk flexibility it would give the co-operative more opportunity to capitalise on the additional volumes it has picked up since the collapse of DFB.

It would also help the company achieve its target of selling 20% of the cheese it produces through its cheese brands during this financial year, said a spokesman. In the past financial year it sold 5% through its cheese brands.

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