A WORLD-famous carpet maker has been rescued from administration, creating 120 jobs.

Hugh Mackay has supplied carpets to business, homes and buildings across the world, including the Sage Gateshead, the US Treasury Department, in Washington DC, and the QE2.

But when the suppliers of yarn ran into difficulties, the company experienced severe disruption to weaving and delivery schedules, leading to delays and cancellations.

The company went into administration last year.

But a grant of £240,000 from regional development agency One NorthEast has helped the company to recover.

Its distinctive Durham Cathedral logo is recognised across the world.

Based in the Meadowfield Industrial Estate, on the outskirts of Durham, the company has been taken over by Iron Castings Limited.

One NorthEast's director of business and industry, David Allison, said: "Hugh Mackay Carpets is an established, world-famous brand which has been based in Durham for over 100 years, although its roots stretch way back to the late 17th Century.

"The award of £240,000 will help safeguard jobs and keep the time-honoured skills of carpet design and manufacture in Durham.

"Hopefully, this grant offer will help this company re-establish its credentials, both nationally and internationally."

A spokesman from Hugh Mackay Carpets said: "The loyalty of the Hugh Mackay customer base while in administration was exceptional and a major part in the new team taking the step forward of putting together the acquisition.

"We believe in our plan to take the business forward and have the support necessary to continue the brand's proud tradition."