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LONDON — Dubai World, the debt-plagued conglomerate and proxy for the free-spending emirate of Dubai, said Thursday that it had reached an agreement with a group of banks to restructure $23.5 billion in debt.

The deal came after months of discussions involving Dubai World and a committee representing more than 90 lenders, including HSBC, Royal Bank of Scotland and Bank of Tokyo-Mitsubishi UFJ. The agreement effectively extends the length of the conglomerate’s loans, giving it time to cut costs and sell assets and put itself in a better position to pay.

The accord signified a willingness among Western banks to take a short-term hit to maintain relationships in a part of the world that, despite Dubai’s debt hiccup, is likely to remain a fruitful place to do business.

It is also true that without the support of Dubai’s richer neighbor, Abu Dhabi, such a deal would not have occurred. Fears that Abu Dhabi would not back up its more profligate neighbor have, for the time being, been assuaged.

The $14.4 billion in debt is to be split into two portions. The first part, $4.4 billion, is scheduled to be repaid in five years, while the second, of $10 billion, is to be repaid over eight years. As announced earlier, the government of Dubai will convert $8.9 billion of debt into Dubai World equity.

The banks will be given a number of interest rate options that vary according to maturity and currency.

Dubai World’s surprise decision late last year to stop paying interest on its mountainous debt shocked world markets and was in some ways an early warning signal for the subsequent financing problems that now face indebted euro zone economies.

Contagion was contained, however, when Abu Dhabi and regional banks stepped in to subscribe to a $20 billion bond issued by Dubai earlier this year.

“The proposal puts the company on a sound financial footing and reflects the continued support of the government of Dubai and its lenders,” said Aidan Birkett, the head of Dubai World’s restructuring effort. “It offers the company the ability to maximize the value of its assets over the medium to long term.”

The Dubai stock market, which had been falling along with global markets recently, rose about 1 percent on the news.

The accord came after an announcement in March in which the government of Dubai agreed to convert debt into equity, pay $500 million in expenses and extend a $1 billion debt facility. The government paid out no additional sums as part of that agreement.

Dubai World emphasized that the agreement was in principle only and required the support of the rest of the company’s creditors. The bank coordination committee represents about 60 percent of Dubai World’s total bank loans, according to the statement.