LDV rescue bid fails as backer pulls the plug

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Around 850 jobs at LDV's factory in Birmingham may now be lost as LDV said it has been forced into administration.

It emerged today that Weststar, a Malaysian-based vehicle importer and international assembly partner of LDV, has pulled out of a deal first announced a month ago.

The failure of the deal will be a grave embarrassment to the Government. Business Secretary Lord Mandelson had offered Weststar a £5 million bridging loan to keep LDV out of administration.

LDV — the former Leyland DAF Vans group which has been producing 13,000 vans a year — is owned by Mandelson's sometime associate Oleg Deripaska, the Russian oligarch.

LDV's failure comes as doubts grow over the future of nearly 2000 workers in Luton and another 3000 on Merseyside making, respectively, Vauxhall vans and the Astra after Vauxhall's bust US parent company, General Motors, decided to sell its European operations.

LDV said: "The directors of LDV Group have been forced to reapply for administration to protect the assets of the business. Essential funds required to maintain the business and workforce as a going concern are not being made available."

Business minister Ian Pearson said: "We are disappointed. We gave LDV a breathing space but in the event, unfortunately, Weststar was unable to cross that bridge."