£5m plea to buy time to rescue LDV

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The move would allow the Birmingham-based firm more time to conclude a deal with potential overseas investors.

Talks over the weekend concerning the company's future failed to secure a breakthrough, but the leader of the buyout team (MBO) said he was "hopeful".

Officials from Lord Mandelson's Department for Business, Enterprise and Regulatory Reform (Berr) were investigating how serious the investors are about putting money into the plant to restart production and press ahead with plans for a new "green" vehicle.

Sources close to the negotiations said that two unnamed overseas companies were involved in talks with LDV management and Berr.

Talks are understood to have revolved around the possibility of putting together a long-term viable funding package from investors to support the proposed management buy-out. A combination of MBO and outside investment is envisaged.

A spokesman for Berr said that the department had nothing to report publicly after the weekend's discussions, much of which took place by telephone.

But the leader of the MBO team, Erik Eberhardson, said he was no less optimistic at the end of the weekend than he was on Friday.

"I am an optimist and that remains the case," he said, speaking from Russia, where LDV's owners Gaz are based. "We are hopeful and I am happy that we are at a stage where we have both a hearing from the Government and clearly interested investors. It could have been a lot worse."

The firm has not built any vehicles since before Christmas and has been attempting to put together a management buy-out for several weeks.