SEVERAL hundred jobs were under threat today after a main employer on the Isle of Sheppey announced it was to go into receivership.

Sheerness Steel Mill, which is owned by ASW and employs 1,250 people in Sheerness and Cardiff, has been in trading difficulties for the last six months.

Although the acquisition of Co-Steel Sheerness has improved ASW's trading performance three factors led to the company's decline.

They were: the decline in the world steel market in the second half of 2001; the imposition of trade sanctions by the United States Government; the import of low priced East European reinforcing steel and a sharp rise in ferrous scrap.

The company tried to persuade its banks Lloyds TSB and Natwest Westminster to extend its overdraft facility to allow them to operate whilst an investor was sought but the banks told the company they would not support them beyond last Friday. It is believed their debt may be between £50 and 60 million.

Graham Mackenzie, ASW chief executive, said: "The board will remain in place as management and the control of the company will be taken over by the receiver.

Business will continue unless the receiver decides to close it down. We as the management hope the receiver will bring in a refinancing package or a buyer."

Sittingbourne and Sheppey MP Derek Wyatt along with politicians from South Wales and Central Government have been trying to save the company since a meeting was held at the Department of Trade and Industry on Monday.

Discussions finished late Tuesday night with no conclusion and ASW had to make an announcement to the City this morning when it opened at 7am.

Derek Wyatt said: "The Sheerness plant is profitable and it has kept ASW alive in recent months. We must now try to find a buyer. The loss of Sheerness Steel would be a devastating blow to the local community.

"I am profoundly disappointed that an attempt to save the company in recent days has not been successful. My biggest worry is the pensions which were passed from Co-Steel to ASW. I will be raising this with Tony Blair."