A salmon farming company yesterday confirmed it is to close its fish processing plant in Stornoway by Hogmanay, with the loss of 130 jobs.

A salmon farming company yesterday confirmed it is to close its fish processing plant in Stornoway by Hogmanay, with the loss of 130 jobs.

In September, Lighthouse Caledonia announced the plant was unsuited to modern techniques and had become inefficient. A three-month consultation with staff was launched.

Since then Lighthouse had been discussing its options with local politicians and government agencies but the company confirmed that the plant was to close.

"We deeply regret the job losses at our processing plant in Stornoway. Throughout our first year of operation, we have had to make some very tough strategic decisions to ensure the long-term sustainability of the business in Scotland," said a spokesman.

The company employs 346 people in Scotland with 35 on fish farms in the Western Isles. Its has a processing plant on Loch Fyne and other farm sites throughout the west and in the islands Lighthouse Caledonia was created in late 2007 following the merger of the Scottish operations of Panfish, Fjord Seafood and selected Marine Harvest assets.

Angus MacNeil, Western Isles SNP MSP, said he understood the company needed to raise between £12m and £15m.

"I wish the company well in their efforts to overcome these financial burdens. They said they wanted to have a processing factory on the island, but at the moment this is not financially possible according to the company."

He added: "A decision will be made by the company at the end of March 2009 to whether they will have a processing operation on Lewis in the future."

He added "This is a huge setback for the economy of the islands. My heart goes out to all these people who will be losing their jobs."