Jarvis exits university accommodation business

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The Independent Online

Jarvis, the troubled construction and engineering group, has sold off its bidding team for building and maintaining university accomodation.

Jarvis, the troubled construction and engineering group, has sold off its bidding team for building and maintaining university accomodation.

The deal means that the company will be longer have the capability of bidding for such work - though analysts have questioned whether it was likely to win tenders anyway, given Jarvis' tarnished reputation.

The company has sold the bidding and administration team from its University Partnerships Programme (UPP), part of its accommodation services division.

It was bought by a specialist vehicle called Alma Mater, which is a joint venture between 3i and Barclays Private Equity Partnership.

Jarvis will keep the actual contracts it has in this area, to build and maintain student accommodation - the company has securitised the future revenues from most of these projects already.

Jarvis said the money raised "is not expected to be material". It is thought the figure is in the low single-digit millions.

Michael Morris, an analyst at Arbuthnot Securities, said: "By and large, UPP is new build. The problems have come in the refurbishment contracts."

Accommodation services lies at the heart of the financial crisis at Jarvis.

However, most of the problems have been caused by the schools part of the accommodation business, which is refurbishment work.

The Jarvis schools contracts have been hit by poor bidding, over-runs and unexpected snags, such as discovering asbestos during the course of projects. Jarvis has said it will honour all existing contracts.

Jarvis has a major disposal programme under way. The company had breached its banking covenants and it has been given until the end of March next year to reduce debt levels.

The group yesterday also announced that it had finalised a deal to sell its interest in Estonian Railways for £6.7m in cash, which has been received.

In addition, Jarvis said that its acting finance director, Alistair Rae, had been appointed to the position permanently.

Mr Rae, a qualified accountant, joined Jarvis as director of corporate affairs in 2001 from HSBC investment bank. He had been acting finance director since April when the previous holder of the job, Robert Kendall, quit.

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