THE jobs of hundreds of engineering workers in the North-East have been saved.

Anglo-Norwegian group Kvaerner, which employs 1,500 people on Teesside, confirmed yesterday that a deal to save it from bankruptcy had been agreed at the last minute.

Crisis talks between the company, its bankers and shareholders at the weekend gave Kvaerner a temporary reprieve, while a long-term rescue plan was worked out.

And yesterday, Kvaerner announced that it had agreed a "complete solution" for solving its financial problems.

Company spokesman Paul Emberley said: "Workers at our Teesside operations went into work yesterday secure in the knowledge that their jobs are safe.

"A lot of uncertainty has been removed from our operations on Teesside.

"With the support of the banks and our biggest shareholders, we have secured a future for the long term of Kvaerner.

"The liquidity problems it has been experiencing have been removed."

Under the terms of the agreement, £77m worth of debt will be turned into shares, while a further £234m will be raised by a rights offering to existing shareholders, while existing loans will be rescheduled until the end of 2004.

The group's largest shareholder, Russia's Yukos Oil, which has a 22 per cent stake in Kvaerner, is fully behind the scheme.

Kvaerner chairman Harald Arnkvaern, said: "This is a solution that mirrors the efforts of many parties who have genuinely wanted to find a long-term solution for Kvaerner.

"Important shareholders, led by Yukos, have contributed to this solution which gives us the opportunity to move forward, develop the Company - and demonstrate to the world that Kvaerner, with its 35,000 employees and unique qualities, is a viable going concern."

He said: "The foundations that have now been established should also make it attractive for investors to participate in the rights offering."