The company also said it agreed to pay increased fees and interest rates.

Tim Ghriskey, chief investment officer with New York-based Solaris Asset Management, which has owned Jones shares in the past but does not currently, welcomed the move.

"One of the overhangs on the stock was the concern it was going to violate loan covenants," he said. "This removes that overhang because they've amended the terms and provided the company with greater flexibility during these trying times.

"To us, this is one of the survivors certainly in the textile/apparel world," Ghriskey added.

Jones, whose brands include Jones New York, Nine West and Anne Klein, in October cautioned that sales trends were in steep decline, forecast a weak holiday shopping season for the retail industry and said it was reining in spending in 2009.

Jones said on Friday that a $750 million facility maturing in May 2010 was reduced to $600 million and its terms changed to offer Jones "greater flexibility in the operation of its businesses during these unprecedented economic times."

A separate facility for $500 million, maturing in June 2009, was terminated, the company said.

The credit facilities are primarily used as backing for trade letters of credit and other supply chain purposes, but also may be used for working capital and general corporate purposes, Jones said. Currently, no cash borrowings are outstanding under the existing facilities.

"We are pleased with the overwhelming support of the financial institutions associated with the amendment process and believe it was prudent to pursue amendments now that allow financial flexibility in the current uncertain economic environment," Jones Chief Financial Officer John McClain said in a statement.

"Our businesses have generated and maintained a significant amount of cash on hand, and we believe that, combined with the $600 million of committed bank credit, provides us with the financial flexibility we need," he added.

Fees and interest rates under the facility increased to current market rates, and Jones said it will grant certain security for borrowings under the facility. In addition, Jones said it will pay customary execution fees.

J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. led the amendment process, said Jones, which added that almost all banks and financial institutions participated in the amendment process.

Shares of Jones rose as high as $5.48, and were still up $1.33, or 34.2 percent, at $5.22 in trading on the New York Stock Exchange. The shares had traded at more than $22 shortly before the global financial crisis erupted in mid-September.

(Reporting by Ben Klayman; Editing by Steve Orlofsky)