High noon for Jarvis

The future of Jarvis is hanging in the balance following the directors’ admission that it was depending on a £25m property deal for survival. The directors of the troubled support services group are attempting to raise the cash from sales and renegotiations of leases with Network Rail.

Jarvis directors said that if the transaction did not receive shareholder approval then lenders would be unlikely to carry out the refinancing necessary for the company’ survival.

The transaction concerns leasehold interests held by the Group close to York railway station, the leasehold property situated at Jarvis House, Toft Green in York and 39 other property interests held by the Group.

In the absence of refinancing by Jarvis's lenders the Group said that emergency funding of working capital would be required by the second half of January 2005, which the firm warned could not be guaranteed.

Jarvis admitted that core lenders were not certain to provide backing even if shareholders approved of the property deal. It said that lenders’ support was also dependent on Jarvis selling its European Roads business and its interests in the Tube PPP Project. Lenders also indicated that Jarvis would need to show progress in its handling of loss-making contracts.

Jarvis said that disposal of its interests in Tube Lines and its Rail Business remained on course for the end of the month.

Chief Executive Ian Lovell said: “A great deal remains to be achieved but we are confident of a satisfactory conclusion.”

“Today's announcement marks a very important step in our strategy. Property is one of the three main assets from which we seek to realise value, the others being the European Roads businesses and our Tube Lines PPP Project investment, with both transactions continuing to make good progress.

In the statement to the Stock Exchange directors said that the Group did not have sufficient working capital for its present requirements, and that would be the case for the next 12 months.