John Worthington resigns just as firm starts to rely on highways maintenance division to help cut debts.
Jarvis’ plans to salvage itself took a knock after a key manager in its highways business decided to leave the firm.
The debt-laden contractor intends to raise money by selling off its PFI and facilities management operations, and then using it to run its highways and rail renewals business.
However, John Worthington, head of Jarvis highways maintenance, resigned from the firm last week.
A Jarvis spokesperson said: “He has indicated he will be leaving us in due course.”
Sources close to the firm said Worthington’s departure was likely after his division lost a £140m seven-year highways maintenance deal for Cheshire council in August.
Jarvis, which had run highways maintenance for the council for seven years previously, was picked as preferred bidder for the deal in May. However the council changed its mind three months later and gave the contract to rival Edmund Nuttall after “detailed analysis of the current position of Jarvis”.
The news came as Jarvis announced last week that Andrew Lezala, chief executive of its rail division, had been appointed chief operating officer responsible for core operations.
Sources close to the firm claimed that Lezala’s appointment would delay a sale of the firm’s facilities management division.
The source said: “Lezala is going to make more changes across the business before the FM sale.”
Jarvis faces another crucial month in its attempts to reduce its £260m debts.
It is holding an extraordinary general meeting on 15 November to allow it to borrow more funds, and is hoping to complete the sale of its stake in the London Underground consortium Tube Lines by the end of November. One City source said this could easily slip into December.
City sources also said the sale of four schools PFI schemes to French contractor Vinci would not be completed in the near future.
One said: “It will take time to consummate the deal.”
Last week, it emerged that the four local authorities who were the clients the deals had raised concern over the sale. Norfolk council said it may have to re-tender its scheme if it was taken over by Vinci.