HUGE debts, which nearly brought the curtain down on Bolton's Octagon Theatre, have been cleared.

Nearly two years ago the town's major arts forum faced closure as it battled debts of £ million, prompting an emergency rescue package to keep the theatre's doors open.

The eleventh hour rescue deal - negotiated with arts bosses and council chiefs - saw £250,000 pumped into the Howell Croft South theatre.

And now Octagon bosses have revealed that following two years of tight financial control after sweeping redundancies, the Octagon's slate has been wiped clean.

Les Harvey, chairman of the Octagon's board, said: "Things have gone a lot better. We're financially much more secure and the debt has been cleared. We're now in a much more stabe position than two years ago with money in the bank.

"The finances are on target and we budget very tightly. Some shows have done better than expected, such as Shirley Valentine. Others have done worse but broadly speaking the pluses and minuses balance each other out."

The announcement comes in the week that Octagon trust members gathered for the theatre's annual meeting.

It provides a remarkable about-turn in the financial fortunes of the theatre which was boosted by the £250,000 deal hammered out in 1999 by Bolton Council, the Arts Council, North West Arts Board and the Association of Greater Manchester Authorities.

Worries that the deal would slash in-house productions to three a year prompted a separate fundraising exercise by SCOT - Support Campaign for the Octagon Theatre - which pulled in £20,000.

And Bolton businesses raised a further £150,000 to fund the theatre to ensure seven in-house productions a year will be staged by resident director Mark Babych.

The only negative for the well-respected regional theatre was the decision of executive director Simon Stallworthy to leave his post this year to concentrate on writing.

His position is temporarily filled by John Blackmore, on a six months contract, with the position due to be advertised next year.

Mr Harvey, who is due to stand down in the Spring after two years as board chairman, revealed the Octagon's finances could be further boosted if they receive an extra slice of government cash aimed at the arts.

He added: "If we can secure our share of that, it will mean even bigger and better productions and we will be able to look after our staff and give them all a bit more.

"The staff here have worked tremendously hard. After the redundancies we were really down to the bare bones but the people who have remained here have pulled out all the stops. I can't speak highly enough of them."

Today council bosses welcomed the theatre's continued revival, with leader Cllr Bob Howarth adding: "We're delighted with what is happening at the Octagon and wish them well for the future.

"We're a full supporter of the theatre and will continue to be so. It's an essential part of the cultural scene in Bolton." Arts chiefs have also joined the praise for the Octagon's fightback.

And Ian Tabbron, drama officer of the North West Arts Board, revealed the theatre is at the centre of extra Government cash plans.

He added: "To have cleared the debts so quickly is wonderful and we're delighted with the quality of work being produced. The Octagon is at the centre of our plans with regard to Government cash, particularly in relation to its excellent community and education work."