Hawick cashmere firm Dawson's share price plunges
Shares in cashmere producer Dawson International plummeted after the firm said it had failed in a bid to put its pension plans into a protection fund.
The Hawick-based company said it was disappointed the pensions regulator and the Pension Protection Fund had rejected its attempt to enter the fund.
Dawson said it would now enter talks with trustees and the regulator to "determine what its options are".
But it warned it may have to appoint administrators if the talks fail.
Dawson's share price fell more than 45% by lunchtime on Friday after the news.
Dawson has been struggling under the weight of a massive pension deficit, which last year was put at about £50m.
In a statement, the company said it could not understand why its "best possible offer" had been rejected by the regulator and the protection fund.
It said: "The board of Dawson International is disappointed to report to shareholders that discussions with the Pension Protection Fund (PPF) and the Pensions Regulator (tPR) to seek a negotiated entry of its UK defined benefit pension plans into the PPF have been unsuccessful with these bodies rejecting all offers made by the company.
"The company will now enter into discussions with the plans' trustees and tPR to determine what its options are.
"Ultimately if no agreement can be reached which is based on the continued trading of the group's businesses, and a binding schedule of contributions is served on the company which the company is unable to fulfil in the specified timescale, the board would have no alternative but to consider appointing administrators for all or part of the group."
Dawson said it had "striven for many years" to reduce the deficit on its pension plans, making contributions of £2.2m in the last financial year alone.
But it added that the deficits had widened despite its efforts, citing as reasons "changes in actuarial assumptions" and a significant rise in associated costs including advisory fees.
Dawson said: "The PPF and tPR have rejected the best possible offer from the company which provided not only significantly more cash than is likely to be recovered through an administration process but also the opportunity for further value to be realised through part-ownership of a profitable continuing business.
"The consequence is likely to be that the plans ultimately enter the PPF, with the PPF receiving lower compensation, and furthermore approximately 200 jobs are put at risk."
Ettrick, Roxburgh and Berwickshire MSP John Lamont said it was "deeply regrettable" that a deal could not be agreed between the parties.
"Dawson International is a strong company and could continue to be a very profitable business if this difficulty could be overcome," he said.
"The company admits that it simply has no more to offer and surely it would have been wiser to negotiate a deal that was plausible rather than threatening the company with insolvency.
"The priority must be to secure the 200 jobs that Dawson provides. I sincerely hope that this does not spell the end for these jobs and that the Pensions Regulator and Protection Fund reopen negotiations. Common sense must prevail."