The Welsh Assembly has sent a formal demand to Dairygold, asking it to pay back a £663,000 grant of public money given to the firm to help it expand the cheese factory. The plant closed last year, with the loss of 115 jobs, and the ensuing battle between the Irish dairy group and Wales' devolved government serve as a reminder to the industry of the potential dangers of taking public money. Dairygold said it was "disappointed" at the suggestion legal action may be used to recoup the money. It said it had received no formal notice as yet, but would "defend itself vigorously" if the matter went to court. "The company has always acted correctly and in good faith in regard to the Felinfach, Ceredigion, facility working hard to build the business and create employment." It blamed the market situation for forcing the packing plant to shut down. "Ultimately, unfortunately, it proved impossible to maintain viability principally because of the huge overcapacity that emerged in the UK cheese packing sector. "In a very difficult market with no sight of a prospect of improvement, Dairygold lost money and ultimately and regrettably had no choice but to make the hard but necessary decision to close the business." In what appeared a thinly veiled slight at Welsh Assmebly members, the firm added that it had tried to meet officials in recent weeks, but "without success". Officials say Dairygold should pay back its grant because it has not fulfilled the conditions set down when the money was awarded, back in 2002. If the case goes to court, it may spark further debate on how dairy firms should juggle public funds and market forces.