The financially-troubled stockbroking firm MMI has announced that an agreement in principle to secure the future of the company has been reached with what is thought to be a consortium of British investors.

The company declined to name the investors before the agreement has been finalised but it is understood that the deal should be completed by the end of the week once legal and other issues have been dealt with. The agreement is also subject to regulatory approval by the Central Bank.

Meanwhile, the Bank has said that it will extend yesterday's deadline for MMI to get its affairs in order. This is the third time the Bank has extended the grace period given the stockbroking firm although it did not set a date this time.

"The Bank has reason to believe that agreement on the acquisition of the entire share capital of MMI, by a consortium of investors, can be expected shortly," it said in a statement issued shortly before MMI's announcement. "For this reason, the Bank's direction to MMI has been extended."

The cash-flow difficulties at MMI's stockbroking arm first came to light in September when the Central Bank ordered it to cease trading except where the Bank gave explicit permission. Heavy trading in the shares of Dana Petroleum on behalf of private clients was the main cause of the problems at the firm. MMI provided a number of clients with roll-over arrangements which allowed them to postpone paying for the shares they had ordered the broker to buy on their behalf.

This left MMI holding a large number of shares which had been bought for more than 20p but had fallen to around 8p. Many of these clients then refused to pay their bills, triggering MMI's cash crisis.

The Bank originally gave the company a few days to get its financial affairs in order - either by reclaiming the estimated £2 million owed to it by clients or by finding an investor to inject capital - but it later extended the deadlines.

Solicitors' letters have been sent to all the MMI clients who have still to pay their debts.

It is not clear whether the rescue package will involve MMI's asset management subsidiary and whether it will lead to the withdrawal of the company's founding directors - Mr Oisin Fanning, Mr John Curran and Mr Paul Boucher - from the management of the stockbroking business.

Mr Tim Murphy was recently appointed managing director of the stockbroking arm and he has been leading the negotiations to save the firm on the MMI side. He is thought likely to remain as managing director under new ownership.