Clients refuse to endorse change of contractor at this stage without first getting proof that Vinci can deliver

The sale of Jarvis’ PFI schools projects to contractor Vinci was left hanging in the balance this week after clients refusing to endorse it.

Jarvis last week announced that it was selling off its four PFI schools schemes to Vinci in an attempt to reduce debt, at the same time as appointing chief executive Alan Lovell to oversee the company’s turnaround (see below).

However, clients on the PFI projects in Norfolk, Manchester and Ireland have voiced concerns over the sale.

Norfolk council said it could not accept Vinci as the contractor on its 37-school PFI without substantial evidence that the firm could deliver its requirements.

Sue Rossiter, the council’s deputy director of education, said: “The potential change of contractor could significantly affect the council’s decision as to whether to continue with the existing project. If Jarvis and Vinci cannot deliver in the way we would like, one option would be for us to retender the scheme.”

Rossiter met Vinci earlier this week to discuss the project. She said: “Vinci will need two to three weeks to examine information in detail before being able to confirm whether it can meet all the terms of the project agreed by Jarvis.”

NCC’s stance was backed by the Irish Department of Education and Science, the client for Jarvis’ £55m Cork School of Music project. A spokesperson said: “We are meeting Vinci next week to discuss PFI work, but we will have to apply our own due diligence before an agreement could take place.”

If Vinci can’t deliver, we’ll re-tender

Sue Rossiter, Norfolk council

However, Manchester council, which had appointed Jarvis to design and rebuild two schools in a £28.7m deal, said it would press ahead with Vinci. A spokesperson said: “We have asked for an early meeting with Vinci, which will now be delivering the project.”

A spokesperson for the PFI division of Bangor South Eastern Education and Library Board, which has two school schemes contracted to Jarvis, declined to comment.

Shareholders lashed out at Jarvis chairman Steve Norris during last Friday’s annual general meeting, calling for his resignation and criticising the board’s intention to pay more than £800,000 in bonuses to six Jarvis directors for the year in which the Potters Bar rail accident claimed the seven lives and the company’s share price plummeted.

Analysts this week said that Lovell would have no option but to continue to sell parts of the business. One source said that any refinancing of the business would amount to little more than “placing Elastoplast” over parts of the firm.

The future of Robert Wallace, head of Jarvis Accommodation Services, was this week also put in doubt. He was brought in three months ago to head the PFI business and at the time denied that it was on the brink of collapse. However, if the proposed deal with Vinci, and the proposed sale of Jarvis’ one-third stake in Tube Lines to Star Capital go ahead, it is unlikely there would be a role for him. This week he said that it was “too early” to comment on his plans.

Jarvis is also in talks to sell its facilities management business, and Vinci is understood to be one of the interested parties.

Looking for trouble: Alan Lovell’s CV

Alan Lovell was last week appointed chief executive of Jarvis, two weeks after Kevin Hyde quit. Lovell is the third person to take this role at the company in just over a year, and chairman Steven Norris said he was appointed because of his ability to turn around businesses. It is understood that Lovell, 50, was brought in by Jarvis’ banks.

An Oxford graduate, he started his career at Pricewaterhouse Coopers in 1976. In 1989 he joined the Conder Group as finance director, and later became chief executive during a troubled period for the company before it went into receivership in 1992.

Lovell was at contractor Costain, first as finance director and later as chief executive, from 1995 to 1997. He was paid £360,000 when he left, despite seeing the company through one of the stock exchange’s longest share suspensions.

After Costain he joined sports equipment company Dunlop Slazenger, where he was promoted to chief executive in February this year. Dunlop Slazenger has also suffered a troubled past, having had to undertake refinancing to deal with its debts.