Jarvis 'saved' by £146m deal

NEW Jarvis chief Alan Lovell claimed to have pulled off the rescue of the near-bust construction group and rail engineer today. He made the claim as he announced the sale of Jarvis's stake in London Underground and the negotiation of a further one-year stay of execution from its bankers who are owed £240m.

Admitting that Jarvis has been within weeks of going bust and that it was unlikely to have had funding beyond the middle of next month, Lovell said its onethird share in the Tube Lines PPP (public-private partnership) maintenance consortium had been sold to Spanish construction giant Grupo Ferrovial for £146m.

In addition, its bankers have agreed to continue to hold off from foreclosing on the Jarvis debt mountain until March 2006.

'This is obviously a vital disposal,' said Lovell, who was brought in to run the company by chairman Steve Norris in October. We had two weeks to go. Now there is every hope that we have a viable, credible and profitable business.'

The sale of the holding in Tube Lines to Ferrovial - which takes the Spanish group's holding in the maintenance company to 66% after it last year rescued another one-third consortium investor Amey - also frees up Jarvis to inject money into its cash-haemorrhaging Private Finance Initiative business building schools, hospitals and university accommodation.

Jarvis has 14 PFI construction contracts from which it has been desperately trying to extricate itself after a disastrous year. Lovell said the company is now close to coming to arrangements to limit its ongoing exposure to the projects. In five of the cases, it will see Jarvis replaced as the main contractor, including the £25m project to build a library and learning centre for Croydon council.

Having substantially cut Jarvis back to its original rail and road maintenance business, Lovell said he could now concentrate on repairing Jarvis's balance sheet. 'That could be by way of a debt-for-equity swap or maybe via a new investor and maybe via a partnership. We will now be able to turn our thoughts to that in the New Year,' he said.

Yet another chapter of woe

JARVIS will announce a further plunge into the red on Wednesday when it reports delayed results for the six months to the end of September. Losses, set to top £200m, could take total red ink to nearly £500m in 18 months - a staggering outcome for a company which, after several share-price dives this year, is valued at just £25m.

It has been a truly annus horribilis for a firm in which directors and executives have come and gone with bewildering regularity. Chairman Steven Norris was at the centre of a conflict of interest row over his bid to become Mayor of London while heading a company with a substantial economic interest in the Tube.