Kintyre wind farm company in financial crisis

Skykon said it was in a very "cash-strapped situation"

The future of a wind turbine manufacturer which received millions of pounds from the Scottish government to safeguard jobs is in doubt.

The Danish company Skykon, which took over the Vestas wind turbine factory in Kintyre last year, has announced it is suspending payments to its creditors.

A total of 120 people are employed at the site just outside Campbeltown.

In a statement Skykon said the company was in a very "cash-strapped situation."

The announcement will come as a blow to First Minister Alex Salmond who went to Kintyre last summer to announce the deal.

The Scottish government agreed £9.2m worth of financial backing for Skykon which was intended to safeguard 100 jobs at the factory and create 300 more.

However so far only £2.4m has been paid out since the money was being delivered in instalments with each batch dependent on Skykon fulfilling a number of conditions.

A Scottish government spokesman said: "We have been in contact with Skykon and are assured that the company is seeking a solution to its immediate financial position.

"Scottish Development International is in ongoing dialogue with the company and will continue to offer every assistance in achieving a positive outcome.

"It is clear to us that the Campbeltown base and its staff have an important role to play in ensuring Scotland continues to lead the development of clean, green energy technology and building a low carbon economy."

Meanwhile, Danish firm Vestas, the world's largest wind turbine manufacturer, said it would axe 3,000 jobs and shut some plants to adjust to weaker demand.