INVERESK yesterday sounded the death knell for two centuries of papermaking at Denny, Stirlingshire when it announced the closure of its last Scottish mill.

The quoted company's Carrongrove mill will shut in November with the potential loss of 150 jobs, a decision blamed by Inveresk on escalating operating costs and volatile currency exchange rates affecting exports.

Carrongrove's plum Gemini paperboard brand name has been sold to Fife-based Tullis Russell for up to pounds-7m, plus a further pounds-8m payable over the next six months as Inveresk maintains Carrongrove's production, sales and marketing.

Inveresk said it will use the pounds-13m to pounds-15m proceeds of the Gemini deal to substantially eliminate nearly pounds-16m of bank debt.

Yesterday's announcement continues a steady stream of site decommissioning which has seen Inveresk slowly become a significant real estate developer as well as a papermaker.

The company's former Caldwells plant at Inverkeithing, Fife, which shut in 2003 with the loss of 150 jobs, has been earmarked for development, while more recently the firm banked a pounds-600,000 profit from the sale of a Fife reservoir.

Carrongrove generated pounds-26.2m of Inveresk's total income of pounds-41m last year and generated operating profits of pounds-1.62m.

Local MSP Dennis Canavan described the mill's closure as "devastating news" for the the area, adding: "This whole exercise smacks of asset stripping."

Canavan said he will be asking the Scottish Executive to intervene and help the workforce in view of the public money spent on the mill.

Alan Walker, chief executive of Inveresk, declined to speculate on what the company will do with the 38-acre Carrongrove site.

However, the latest economic development plan for the area shows that there has already been contact between Inveresk and the planning authorities about developing land to the west of the mill for industrial and development use.

The Falkirk plan also contains proposals greatly to increase Denny's housing stock.

Walker said : "The harsh reality is that (Carrongrove) is operating in very challenging market conditions and I have long spoken of the need for consolidation within the industry."

Inveresk has endured major downsizing since the Swedish corporate investor Jan Bernander, who also chairs rival group Klippan, began building a substantial minority stake in the company at the turn of the decade.

The firm now has just one mill left, at St Cuthberts in Somerset, which the company stressed will continue to operate in its own speciality fields of artist and inkjet papers.

Inveresk shares closed up 1.5p at 16.25p.