Shares in Jarvis plunged almost a third on Tuesday when it revealed it had been forced to borrow a further £17m to stay afloat.

The company said the money was required to fund higher than anticipated working capital needs.

Chief executive Alan Lovell played down the news this week, saying that it demonstrated “the ongoing support of our lending group”. However, its debt already stands at £280m, and the news came as a nasty shock to the City.

A source close to the company said that the £17m was needed because Jarvis had expected to receive the proceeds from the sale of its £24.5m European roads business to French firm Colas by the end of last month, but payment had been delayed. Jarvis is awaiting the go-ahead from French competition authorities.

Jarvis said that it was undertaking a financial restructuring of the business. This is likely to include a debt-for-equity swap, in which lenders exchange their debts for shareholdings in the business.

In February, a syndicate that included Barclays and Royal Bank of Scotland transferred part of its debt to a group led by the Bank of America. Bank of America paid a reduced price, understood to be about 50-75p for every pound of original debt. This meant that the original lenders were writing off some of the money they had lent.

The remaining core businesses are rail, roads and plant hire.