The Government has turned down Waterford Crystal's request for a loan guarantee aimed at safeguarding its future.
Waterford Wedgwood, the parent company of Waterford Crystal, recently asked the Government to guarantee a €39 million loan to the group because it cannot borrow more money from its banks due to the covenants on its existing loans.
Government officals have spent the last few days examining whether the State could legally underwrite loans within EU rules and was being advised by KPMG.
The troubled company has already announced plans to close its plant for up to three weeks over the next two months.
Waterford Wedgwood had net debts of €473.4 million last September and the company's main shareholders, Sir Anthony O'Reilly and his brother-in-law Peter Goulandris, have propped up the company, investing €300 million in recent years.
The company, which lost €260 million in the two years to March 31st 2007, announced last November that it was cutting 490 jobs at the crystal-manufacturing plant and that any State guarantee would secure the remaining 550 jobs at its factory in Waterford.
Waterford Crystal employed 3,200 people in the late 1980s but its parent company has been hit by a downturn in the sales of its luxury goods in recent years.
There were fears in political circles that assisting Waterford Crystal could draw the Government into the future closure of the factory. The company's request for support had been discussed at Cabinet several times in recent weeks.