Northern textiles group Lamont Holdings will sell its Moygashel business to Ulster Weavers Apparel for £3.3 million sterling (€5.2 million) as part of a restructuring plan announced last year.

The company also said it has disposed of CMI Ltd, a subsidiary company to which it transferred certain property assets as part of a refinancing deal last July.

Moygashel is a leading producer of Irish linen and a supplier of furnishing fabrics. But delivery delays experienced in 1998 led to it sustaining losses, which have continued.

"The Moygashel business was unable to regain customer confidence in a realistic time-scale and therefore did not generate sufficient sales volume in either 1999 or 2000, thereby incurring significant trading losses which cannot be sustained by a group of our size," the company said.

Despite turnover of £10.1 million in 1999, Moygashel suffered an operating loss of £3.1 million and exceptional costs and provisions of £3.4 million. Losses in 1998 amounted to £2.7 million, while losses in the first half of 2000 were £1.6 million.