TROUBLED shipbuilder Swan Hunter is bidding for a ship conversion contract that could bring work to the yard later this year.

The contract, if secured, would provide a lifeline for Swans as concerns mount over whether its Wallsend yard will complete the work on the Royal Fleet Auxiliary vessel, the Lyme Bay.

Swans is awaiting a decision from the Ministry of Defence (MoD) over whether the Lyme will remain in the North-East or move elsewhere due to cost increases.

An MoD spokesman said yesterday that the two parties were still in negotiations and no decision had been reached.

Swans owner Jaap Kroese said he was doing his utmost to bring work to the yard.

"We are still trying to get some other work in. We are in negotiations with a firm about ship conversions, which could bring work to the yard by September or October," he said.

"There are some other people bidding for the work so I can't say anymore about it at this time."

Swans is also awaiting an Environment Agency decision on its application for licences to dismantle ships at Wallsend. The decision was expected before Christmas but has twice been pushed back and is expected on Monday.

An Agency spokesman said yesterday: "We are still working to the May 22 deadline."