Bellavista Oveja Tome, billed as Chile's oldest textiles firm, will shut down after losing major customer Brooks Brothers and failing to procure enough financing to turn around its struggling business, the company has said in a statement.

The closure will leave 800 workers without jobs at the company's factory in Tome, 500km from Chile's capital Santiago.

The bankrupt firm said it had hoped to obtain a $12m loan form local lender Banco Estado and an additional $15m from shareholders, but that the strategy failed after Brooks Brothers, which bought 20% of Bellavista's production, decided to end ties with the firm.

"Our main client has told us he will not continue buying our products because of the uncertainty surrounding our future and our ability to make ontime deliveries," the company's president Miguel Otero was quoted as telling local press, adding that the situation makes the business "unviable."

The decision by US suit maker Brooks was expected to cause a domino effect, prompting other customers to abandon the 142-year-old company plagued by operational problems, industry observers said.

Hurt by rising raw-material and energy prices, Bellavista's profits had fallen by $5m between 2002 and 2006, according to Otero.

The company, which specialised in suit fabrics, filed for bankruptcy in early November. Its troubles triggered heavy protests from workers and unions who demanded the government to inject cash to save the company.

By Ivan Castano.