Hundreds of jobs could be created in Donegal if two deals to buy former Fruit of the Loom plants at Malin and Raphoe go through.

Negotiations involving IDA Ireland and Enterprise Ireland for the sale of the Raphoe plant to a foreign company and the Malin plant to a Belfast firm are at an advanced stage, and could be concluded in the next two months.

Donegal suffered a serious blow last December when the US multinational, Fruit of the Loom, announced 780 job losses at plants in Raphoe, Malin Head and Milford.

The three plants were closed down within the past month and the company's remaining workers in plants in Buncrana and Derry are on a three-day working week.

The IDA's regional manager for the north-west, Mr Joe McHugh, said discussions with a foreign firm to buy the 67,000 sq ft Raphoe premises are nearing conclusion and "look encouraging".

He said a "sizeable" number of jobs would be created if the deal, which includes a grant-aid package, goes ahead. The IDA was "reasonably confident that it will lead to something positive", he added.

A Belfast call centre and direct mail house, Forward Emphasis, confirmed it was negotiating the purchase of the 15,000 sq ft Malin plant, saying it planned to create up to 200 jobs over three years.

The company has been in discussions with Enterprise Ireland over a grant-aid package for the plan. The board of Enterprise Ireland should decide on the bid within the next two months, according to reliable sources.

A spokeswoman for Enterprise Ireland confirmed that negotiations over the Malin purchase were taking place.

Forward Emphasis hopes to begin business in the premises by next spring, creating an initial 50 jobs, with up to 200 jobs within three years.

"We have entered into negotiations and we would be over the moon to be able to provide jobs for the peninsula," said Mr Patrick Loughrey, a Forward Emphasis director.

The IDA is facilitating negotiations between the company and Fruit of the Loom over the purchase of the plant which, at current property rates, would cost about £500,000 to build. Mr McHugh said the building was being offered at an "attractive price".

Negotiations by a German company last month to purchase the 63,000 sq ft Milford plant fell through after the firm decided to acquire a premises in Spain instead. Mr McHugh said renewed efforts were being made to market the plant again.