Engineering giant Kvaerner, which employs more than 1,500 people on Teesside, has been handed a last-minute lifeline.

The company's largest shareholder, Moscow-based Yukos Oil, has presented a rescue plan to the group's board of directors and its major bank creditors.

The proposal will provide Kvaerner with working capital for the next week pending completion of negotiations for the restructuring of debt and establishing a guarantee consortium for an equity rights issue.

A statement from the oil firm said: "Yukos believes that a credible rescue plan must be of a magnitude sufficient to re-establish trust and confidence in Kvaerner for the long-term."

The Anglo-Norwegian group reportedly needs £40m to pay its creditors.

Senior managers and directors met investors, banks and lawyers as well as the Norwegian government over the weekend.

Kvaerner's workforce in the UK totals around 7,000 workers including sites on Teesside, the Solent in Hampshire and in Aberdeen.