All 170 jobs have been saved after Caparo Braking agreed to buy AP Hydraulics from the administrator.

Leamington Spa-based AP, was forced to call in PricewaterhouseCoopers in January after its pension fund deficit threatened the firm's viability.

The company, which designs, develops and manufactures specialist braking systems for the automotive industry, had a deficit believed to be around £40 million.

But with it only just breaking even on sales of £15 million, it was unable to meet its commitment to reducing the shortfall.

Matthew Hammond and Mark Shires from PwC continued to trade the business while a buyer was sought for the firm, whose customers include Aston Martin, Land Rover and London Taxis and Jaguar.

Mr Hammond said: "This was an unusual administration because the pension issue stood head and shoulders above all the financial problems at the company.

"The company had to make a pension contribution of £2 million this year, which could have been met, but would have made the business insolvent. Without raising funds the company wouldn't have been able to eat into the pension deficit at all.

"Because of the size of the pension deficit in relation to the size of the business, they had no few options but to go into administration."

Mr Hammond said AP was one of the earliest examples of a firm going under after being forced into an agreement with the Pensions Regulator on settling its deficit.

He added: "I am delighted that we have completed this deal that delivers both a successful outcome for the creditors and preserves the employment of 170 people in the area.

"I would like to thank the employees, customers and suppliers of AP Hydraulics for their ongoing support throughout this process. They were prepared to agree to our terms of trading, and opera-tionally they remained loyal to the business when considered resourcing, "Without the support of the company's key customers, many of which are Midlands based automotive businesses, this sale would not have been possible."

Around 98 per cent of the funds raised from the transaction, which was for an undisclosed amount, will go towards the pension deficit.

Mr Hammond said: "Caparo said they would continue to operate the business from that site for the foreseeable future; they are looking to use the skills and expertise of the management team.

"We were pleased with the level of transaction."