Cashmere and bed linens company Dawson International has agreed to a possible deal over the sale of its Todd & Duncan cashmere yarn spinning business to China's Ningxia Zhongyin Cashmere Co.
Dawson says there is no certainty that the agreement would fructify into a sale, and that the deal still depended on due diligence and contractual negotiations.
The proposed suitor, China's Zhongyin, is a major supplier of high quality cashmere fibre to Todd & Duncan.
In case a deal does come through, Zhongyin has indicated that it plans to retain the existing Scottish manufacturing base, along with its workforce and the integrity of Todd & Duncan's market-leading product quality.
Last year, Todd & Duncan made around 300 tonnes of cashmere yarn. The company had net operating income of £17.5 million at the end of December 2007.
Dawson had ended talks with Zhongyin over the sale of the entire group last June, after 10 months of discussions. It has now made it evident that it is looking at all possible options for Todd & Duncan, which has an employee strength of 250 at the Lochleven Mills headquarters of the group at Kinross. Chairman Mike Hartley said that though they had ''improved the business operationally'' the rate of return on the assets was below par.