Banks pull Jarvis back from brink

AILING support services firm Jarvis has managed to stave off bankruptcy after securing an eleventh-hour extension to its £275m banking facilities. Bankers Barclays and the Royal Bank of Scotland have signed on the dotted line to extend Jarvis's financing through to March 2006, offering new chief executive Alan Lovell a much-needed lifeline.

The firm has been teetering on the brink of bankruptcy since last summer when it breached strict banking covenants.

Lovell saidail: 'I am delighted as this secures our survival. This is the first stage of getting back on our feet.'

The extension - signed at the weekend - came after Lovell managed to sign agreements to complete its 14 unfinished construction contracts. Discussions on the contracts had gone on for months with Lovell brokering the deal with the four equity houses, 27 banks and four surety companies involved in the projects. Jarvis is to contribute £51m to ensure that the contracts are completed, with five being sold on to an unnamed contractor.

In addition, Jarvis has now received £146.8m after agreeing to sell its stake in London Underground maintenance firm Tube Lines to Amey.

Lovell said this 'draws a line' under the firm's ' troubled financial history'. He is on track to strip out a further £30m of costs - boosted by the closure of Jarvis's City offices - after a £23m cost-saving exercise last summer.

Discussions on repairing the firm's indebted balance sheet will begin in earnest in April with Lovell mooting the possibility of a debt-for-equity swap or even selling the business.

Lovell, who took over from predecessor Kevin Hyde in October, is a turnaround specialist credited with reviving Dunlop-Slazenger.