Quinn Group is planning legal action against UK Deputy Prime Minister John Prescott over his decision to hold a public inquiry into its construction of a £250 million (€360 million) glass plant near Chester.

The opening of the plant, which was scheduled for the first half of this year, could be delayed by up to two years.

A spokesman for the Fermanagh-based Quinn Group said the company had written to Mr Prescott asking him to outline the reasons why he had invoked his powers to hold an inquiry. "We want to give him time to respond but we are talking a matter of weeks [ before commencing legal action]," said the spokesman. The most likely course would be a judicial review of the decision.

Mr Prescott has cited "important wider implications" for the inquiry into the plant. Quinn group obtained permission for the plant in October 2003 but subsequently sought to increase its capacity by 25 per cent. This required a second application. However, the company proceeded with construction based on the original permission.

Mr Prescott's decision to hold the inquiry follows sustained lobbying by Irish-owned Ardagh Glass, which owns British glass producer Rockware.

The opening of the Quinn plant, which could supply up to 20 per cent of the UK market, would have very serious consequences for Rockware, which has a number of older plants located mostly in Yorkshire. The company has lobbied a number of members of parliament in the north of England over the impact of the Quinn plant, which could cost 1,000 jobs in Yorkshire.

Quinn said yesterday that its project continued to enjoy the support of the local authorities in the northwest of England and the North West Development Agency.

It added that the department of trade and industry, which is grant aiding the project, had written to it renewing its support for the project despite the public inquiry.

"The only people who have a problem with this is Rockware," said the spokesman.

Ardagh Glass is currently the subject of a leveraged takeover by Caona, a vehicle controlled by its largest shareholders, Yeoman and businessman Paul Coulson.

Caona has raised financing of more than €125 million for the deal and, in a bond document, it highlights the coming on stream of the Quinn group's plant as a serious threat to Ardagh Glass.

John Collins, a Dublin solicitor representing a small group of Ardagh shareholders who oppose the takeover, said yesterday that they were unaware of the lobbying undertaken by Rockware.

"The shareholders were not informed that Ardagh Glass Ltd had lobbied to slow down the development of Quinn's factory. In fact, the information they were provided with anticipated it opening in the second half of 2005," he said.

The shareholders are unhappy with the lack of transparency surrounding the decision of the Ardagh board of directors to accept the offer from Caona.

They are concerned that the price undervalues their shares in Ardagh and that they are not being given the chance to participate in Caona on the same terms as the large shareholders.

"It seems unlikely that the possibility of success of any lobbying by Rockware, the subsidiary of Ardagh Glass, was a factor which could have been ignored at such directors' meetings.

"In any event, it was not information that was available to the shareholders and it seems evident the absence of such information would have a dampening effect on the shares," he said.

Mr Collins said the shareholders he represents believed that the directors had a duty to bring information which impacts on the value of their shares to the attention of the shareholders while the shareholders were considering whether or not to accept the offer for their shares.

A spokesman for Caona said that its offer had now closed with shareholders owning 99 per cent of the company accepting the offer.

He said that the company had kept shareholders aware of the potentially detrimental affect of the Quinn plant and took appropriate action. "It remains to be seen whether it will be effective."