The State enterprise agency, Forbairt, is working on a rescue plan for the Co Donegal textile company, Gaeltex, which has closed with the loss of 85 jobs.

A spokesman for Forbairt said discussions with interested parties were necessarily confidential but would have to be concluded before a creditors' meeting, scheduled for September 8th, was held.

"We are in discussion with the company and other parties to explore possible options in continuing as much of the business as is feasible," he said. Representatives of Gaeltex, which manufactured children's clothing, had already met with another Letterkenny-based company, Sub 4 International, without any conclusive outcome. "We are into branded sportswear. There is really no synergy between contract children's wear and branded sportswear," the managing director of Sub 4, Mr Stuart Scott, said.

He added that he did not believe a business partner of his in Sub 4, Mr Terry McCartney, who is also the chairman of Adria, a Co Tyrone hosiery company, was interested in taking over Gaeltex, as was speculated in some reports. Mr McCartney was unavailable for comment yesterday.