The KTH factory closed after campaigns to keep it open failed

A garden furniture company had offered to take over the KTH factory - which closed two months ago with the loss of 250 jobs - from the Welsh Development Agency (WDA).

But members of the Llanidloes Regeneration Group have been told that if the move went ahead a regeneration plan - improving the redundant site and surrounding area - would have to be scrapped.

"Basically, we were told by the WDA that, if we allowed Benji and Co to move into the KTH building, the regeneration plan would not go ahead," said Llanidloes Mayor Edward Breeze.

Benji and Co employs 11 people but its owner claimed the move would have provided 51 new jobs by 2006.

I will now have to seriously consider moving my business somewhere else, including England Peter Rees

The move had been backed by Llanidloes councillors who claim the business's current site is causing noise pollution and traffic problems.

Peter Rees, who owns Benji and Co, said he was due to meet WDA officers and members of the Task Force to discuss alternative moves on Thursday.

"I can only say that the decision is appalling and some people have some serious questions to answer about why we aren't allowed to move to the KTH site," Mr Rees said.

His firm sells repaired garden machinery, tools and furniture at auctions across the UK and had recently secured �20m contracts with major DIY centres nationwide.

Part of Mr Rees' buy-up plan was a �200,000 redevelopment of the KTH building.

"I will now have to seriously consider moving my business somewhere else, including England," he said.

Contamination

The WDA is one of several agencies in the Llanidloes Task Force which is developing the regeneration strategy.

The plan includes building a link road from the KTH site which would also open up land for new housing.

A WDA spokesman said the group had considered all options open to them.

"But the existing archaic infrastructure (at the KTH site) is in need of substantial investment, including the clearance of some contamination.

The regeneration group believes redevelopment provides the best long-term opportunity to attract future investment and employment opportunities into the town, he said.