The KTH factory is due to be demolished in the New Year

Llanidloes-based company Benji and Co 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).

The company's owner claims members of the Llanidloes Regeneration Group were told that if the move went ahead a new link road connecting the plant to the main trunk road passing the town would 'almost certainly' not go ahead.

But the WDA has denied any misleading information was given to the regeneration group - and said the group had decided to do all it could to aid Benji & Co's expansion plans.

Members voted in favour of demolishing the factory so that new hi-tech business units could be put up in its place.

Everything about this stinks and I think the task force should have another vote on the options available to them Peter Rees

But the Welsh Economic Development Minister, Andrew Davies, speaking in Cardiff Bay, told AM Glyn Davies that he had given no indication that the access road would not be built if Benji and Co took over the site.

This has led to Benji and Co's owner, Peter Rees claiming the regeneration group were misled and he has demanded that they be given the chance to vote again on the issue.

Benji and Co employs 11 people but Mr Rees had claimed the move to the KTH site would have provided 51 new jobs by 2006.

"Everything about this stinks and I think the regeneration group should have another vote on the options available to them," Mr Rees said.

"We are launching an appeal with the WDA who should be helping a local company create up to 60 new jobs rather than build a hi-tech unit that nobody wants."

A report put before the regeneration group last month said that the jobs created by Benji and Co would be 'of questionable quality and sustainability.'

Benji and Co is now based just off Llanidloes' main street

It added that the move would involve 'almost certainly the loss of the new road development.'

Llanidloes' Mayor, Edward Breeze is a member of the regeneration group, would not reveal whether the access road was a factor in their decision.

"The task force has made a decision and we stand by the decision that was made from the limited choices given to us."

A WDA spokesman said: "The regeneration group agreed unanimously to adopt a medium to long term vision which aims to develop a new economic agenda for the town aimed at high value businesses which fits strategically within the Severn Valley corridor.

"The group agreed to do all it can for Benji and Co's expansion requirements."

Benji and Co 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.