UP to 200 rail jobs could be created through a £10m deal for a former carriageworks site in York.

Newly-formed Holgate Rail Industries (HRI) is on the brink of acquiring the site from owners Ashtenne to carry out maintenance on railway support vehicles.

A deal could be signed within weeks. HRI director Nigel Box said he hoped to recruit from the local workforce.

The news is the latest twist in the long-running saga of the carriageworks, once one of the city's biggest employers, which closed in 1995.

In 1997, Thrall Europa arrived from the US to save the site for rail workers, but last year it closed again with the loss of 260 jobs.

Mr Box said he and two other directors set up HRI with the express purpose of buying the Thrall site.

The three have worked in York for many years as independent buyers for large rail firms such as Network Rail.

Mr Box said yesterday he was hopeful that the deal would go through.

"Negotiations with Ashtenne are progressing very well," he said.

"There's a big gap in the market at the moment. Maintaining rail equipment has become much more sophisticated and needs to be done indoors."

Mr Box said the firm also hoped to use the site as a rail training centre and hoped to stay there long-term.

HRI is seeking planning permission to build rail tracks on land adjacent to the Thrall site. The application is a prerequisite for the company's proposal for the site.

City of York council leader Steve Galloway said the development was potentially excellent news for the city.

"It would secure a rail-related activity on this historically important site and maintain rail manufacturing skills in the city," he said.

"It means that some of the investment made in the area, which we feared might be lost, can now contribute to this deal getting off the ground."