POULTRY company Challenger Foods is creating up to 40 jobs at its Wearside base.

Challenger, which supplies poultry products to the food industry, was awarded a £200,000 grant from regional development agency One NorthEast, which helped fund the extension of its Sunderland factory.

The company, which processes chicken for use in sandwiches, pizzas and pastas, also refurbished its plant at Leechmere Industrial Estate, and bought equipment.

The changes will eventually lead to the creation of 40 jobs, taking the total workforce to 155.

Financial director David Weatherhead said: "The £2m extension has increased our production capability by 50 per cent."

Challenger Foods, which was set up in 1986, was awarded the grant in instalments, with payments made when employment and expansion targets were met. So far, it has received £150,000 and is due to collect the final payment soon.

Ian Williams, of One NorthEast, said: "Operations at the factory are now running a lot more productively, which will put the company in a really strong position when it comes to attracting new business."