Jarvis 'near Tube Lines stake sale'

THERE was hope for some light at the end of the tunnel today as speculation grew that troubled rail engineer Jarvis is close to a sale of its one-third stake in London Underground maintenance firm Tube Lines.

Jarvis confirmed it is making 'good progress' in its attempts to sign a deal to sell the stake to Star Capital for just over £100m.

Star is a €580m (£400m) specialist fund set up by former senior Hambros banker Tony Mallin to buy assets in the secondary market in Private Finance Initiative infrastructure assets.

The sale is the single biggest step Jarvis will take to paying off a big chunk of its £240m debts, although the company has admitted current trading is so bad that money raised may be pumped back in as working capital.

It is understood talk that the deal has been signed is 'premature' but it is hoped agreements can be made by Christmas. Jarvis shares, which fell to an all-time low of 7¾p earlier this month, were ¼p better today at 10p.

Jarvis, however, has warned that even after a Tube Lines deal, it will survive only with the goodwill of its banks and an injection of new capital at some stage.