Floundering contractor lightens its load by selling four schemes to concentrate on others nearer completion
Jarvis this week agreed to sell four of its contracts to French group Vinci as part of an attempt to stave off imminent financial ruin.
The contractor is to sell PFI education projects in Lancaster, Nottingham, Croydon in Surrey and Rhonda in South Wales. Work has started on all four.
The two companies met last Friday to hammer out the terms of the deal.
The special purpose vehicles for the projects will pay Vinci about £100m to take over the work.
Vinci was in talks to buy Jarvis’ PFI bidding business, which would have led to its taking on contracts where Jarvis was preferred bidder. However, after a studying the figures the French group decided not to pursue the deal.
Jarvis sold the business to Hochtief last week for £1.2m.
Jarvis wants to complete its exit from the construction sector by Christmas, and Vinci will go ahead only if it can get on site by the end of January.
Jarvis has 10 other PFI projects at an advanced stage of construction, and is hoping that the deal with Vinci will leave it free to concentrate on completing nine of them. Jarvis intends to sell these on completion.
It is thought to be in talks with two bidders over the sale of the 10th project.
The company is understood to have received a further boost this week when it agreed a deal with investor Star Capital to sell its one-third stake in the London Underground Tube Lines consortium for about £100m.
Last week, chief executive Alan Lovell warned that the company was only weeks away from collapse if it failed to sell the stake.
The company is believed to be more than £240m in debt, and without the sale of its stake in Tube Lines, Jarvis is unlikely to secure the refinancing required to keep it afloat.
Lovell hopes to complete the Tube Lines sale by Christmas, along with its European roads business, which is expected to fetch about £20m.