Last-ditch rescue of LDV called off

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Malaysian giant Weststar announced last month that it had entered into an agreement with LDV's owner, GAZ, to acquire its entire interest in the Birmingham-based firm, which employs 850 workers, with many more dependent on the business.

LDV halted production in mid-December after a huge slump in demand for vans but withdrew an application for administration after the deal was announced, aided by a £5 million Government bridging loan.

But Weststar has decided not to go ahead with the deal after being unable to raise funds.

LDV said it had been forced to reapply for administration after essential funds to maintain the business and workforce as a going concern had not being made available.

The surprise move dismayed unions and business leaders and led to workers being sent home from the factory.

LDV said: "The directors of LDV Group have been forced to reapply for administration to protect the assets of the business. This is due to the fact that 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 with the news that, despite the bridging facility made available by the Government, Weststar of Malaysia has been unable to proceed with its purchase of LDV. We gave LDV a breathing space, a bridge to the future, but in the event, unfortunately, Weststar was unable to cross that bridge.

"This is clearly a worrying time for the workforce and we are ready to offer support to the workers through Advantage West Midlands and the Job Centre Rapid Response Team."

Joe Morgan, regional secretary of the GMB union, said: "This is really bad, unexpected news. GMB will be seeking immediate talks with the management of LDV, with the Government and with Weststar to see what the options for the future are. We are firmly of the view that the UK Government cannot stand aside and let these manufacturing jobs go to the wall."