Alan Lovell, chief executive of embattled support services group Jarvis, is to stand down next March just months after a major refinancing of the group, writes George Hay.
Lovell, who has been in the job for only 10 months, will leave the company before it moves its headquarters to York. Finance director Alasdair Marnoch, who was appointed in June, will also leave early next year.
A company spokesperson said replacements for the two men had not been decided, and that it had never been Mr Lovell’s intention to stay after the company’s recent restructuring, which handed 95% of the firm to its creditors.
Jarvis has debts of £380m after getting into difficulties over the Potters Bar rail crash and bidding for too many PFI contracts between 1995 and 2003.
A complex refinancing of the business, once valued at £1bn, is under way, including a debt-for-equity swap. Further details were released last week.
A prospectus document for a £50m fundraising scheme informs prospective investors: “Both Alan Lovell and Alasdair Marnoch have indicated their intention to step down from the board. While the company believes that adequate succession planning is being undertaken, there is a risk that any replacements for the role of chief executive and finance director may not be able to deliver the business plan successfully.”
The document says the two directors will stay until the end of the financial year in March. They will oversee the last of the disposals of unwanted parts of the business as well as sorting out the troubled facilities management arm. The rail track renewal, UK roads and plant hire divisions will remain.
In the restructuring, creditors will take control of the company, leaving shareholders with virtually nothing. The creditors are then being asked to pump in £50m – although if they refuse, Deutsche Bank will plug the gap. The new shares will make up 95% of the company, so if creditors refuse to back the fundraising their holding will also be significantly diluted.
It is unlikely a lawsuit will occur but we have considered it
Alan Lovell, chief executive, Jarvis
The company also announced its rescue timetable. Creditors will take control at the end of this month, at the same time that the term of a £40m loan expires.
Jarvis will then receive the £50m from new investors, which will also be used to pay £15m restructuring costs. The company has arranged a credit facility to keep it going.
Jarvis has considered taking legal action against former directors and auditors of the company following its fall from grace.
Lovell confirmed the board had not ruled out a lawsuit.
“The board has not come to a final conclusion,” he said. “It is unlikely that it will occur, but it is appropriate for us to have considered the possibility.”
Lovell declined to comment on the grounds for any action or which directors or auditors would be targeted in such a move.
Another one bites the dust: Jarvis bosses’ track records
Jarvis has gone through a succession of senior managers as it has lurched from crisis to crisis. Kevin Hyde spent a year and a half in the top job before Alan Lovell took over.
In June, Andrew Lezala left the post of chief operating officer to join Metronet after just eight months in the job. Alistair Rae resigned as finance director in March after a year in the role. His predecessor, Robert Kendall, left in April 2004 after three years.
In addition, the architect of the company, Paris Moayedi, ran it from 1994 but resigned when it started to hit troubled waters in late 2003.