LONDON (AP) -- The British government on Wednesday gave financial backing to a Malaysian company's bid to take over struggling British van maker LDV to save it from bankruptcy.
With LDV facing a court hearing on Wednesday on its application for administration, a form of bankruptcy protection from creditors, the company confirmed that Weststar had emerged as a potential savior of the Birmingham-based company.
Britain's Department of Business, Enterprise & Regulatory Reform earlier confirmed that it has offered a bridging loan of up to 5 million pounds ($7.5 million) to help keep the company going.
"We appreciate that this is a difficult time for the government, but this support allows time for negotiations to be concluded to secure thousands of British jobs, when the alternative would almost certainly have been the loss of them all," LDV said in a statement posted on its Web site.
The company said it would take "another few weeks" to complete the sale, and it will report progress to the court on May 13.
The court hearing for administration was adjourned for a week after Judge David Cooke was told that Russia's Gaz Group, controlled by Oleg Deripaska, had agreed in principle to sell its entire shareholding in LDV to Weststar, based in Kuala Lumpur.
"Weststar's proposed purchase of LDV offers the only credible chance of keeping this manufacturing plant in the U.K.," said Ian Pearson, the government business minister.
"Whilst completion of the deal is not certain, it would have been irresponsible of the government not to support it going forward. But this is a one-off bridging loan and it cannot be extended."
Erik Eberhardson, a former head of Gaz Group who led an attempted management buyout, said he was pleased with the proposed takeover.
"It is now vital to avoid administration so that Weststar and LDV have the best start for the future of the business," Eberhardson said.
A week ago, LDV laid off most of its 900 employees and said it would seek administration if no other solution emerged.
If LDV goes into administration, it would be the first vehicle manufacturer to fail in a recession which has seen U.K. vehicle production fall by half since a year ago.
LDV has produced 39 vans in the first three months of this year, after turning out 9,308 last year, according to the Society of Motor Manufacturers and Traders.
The company has applied to the European Investment Bank for a loan but the bank will not support the company unless additional private funding is secured, LDV said.
LDV, formerly Leyland DAF Vans, has been owned by Russia's Gaz Group, controlled by billionaire Oleg Deripaska, since 2006.
Weststar has exclusive rights to market, assemble, distribute and service LDV's Maxus light commercial vehicles in 20 countries, including Vietnam, Indonesia, Australia, and New Zealand.