Tubing manufacturer Reflex & Allen has called off talks with developer Hadleigh Industrial Estates over a large pre-let to bring the mothballed plant in Bodelwyddan back into use.
Hadleigh submitted a planning application in June for the refurbishment of the 150,000 sq ft factory, along with construction of 70,000 sq ft of new industrial units and 134 homes.
Richard Lanyon, director of Hadleigh, said: "Nobody has fallen out with anybody. Reflex & Allen were faced with a situation where they had to vary the terms at the last minute before signing. We've always said that the economics of the deal were finely balanced and this rather frustratingly proves the point.
"Any variation to the funding, whether in terms of the price for the refurbished factory or the housing, makes the scheme unviable. This is a key strategic site for manufacturing in Wales and we're hopeful of full support from Denbighshire's planning committee in September so that we can continue to pursue a manufacturing tenant for the factory.
"The plans, as submitted, remain the only viable option for the site in our view. Without the mix of uses we've identified, it'll remain empty and a major opportunity to develop Wales's manufacturing capacity will be lost. That would be ironic, just when the country is enjoying a manufacturing renaissance."
Reflex & Allen employs 220 people making pneumatic and hydraulic tubing in Kinmel Park in Bodelwyddan. The Hotpoint plant closed in 2009; at its height it employed more than 1,000 people.