NEGOTIATIONS over the sale of Allied Steel & Wire Holdings, owners of Sheerness steel mill, have reached a critical stage.

But hopes are mounting that the potential buyer will soon confirm a sale after optimistic noises from the company's joint administrative receivers this week.

A meeting of the company's unsecured creditors in Cardiff was told on Monday that the mill does not require significant capital expenditure "and is generating positive cashflow".

Richard Hill and Roger Oldfield, joint administrative receivers with KPMG Corporate Recovery, which is handling the sale, said that no preferred purchaser had been formally notified.

But they expected the position to be clarified "very shortly". Since negotiations were at a critical stage, they were unable to disclose further details for the time being.

But they said the confidential talks concern a sale of the business and assets, including plant and equipment and leasehold land and buildings in Sheerness.

* The meeting was told that the company's bankers were owed almost £58 million. It was anticipated that preferential creditors would be paid in full.

But unsecured creditors, whose claims are estimated to total £51 million, are unlikely to get a penny.