Stricken support services group Jarvis has staved off collapse after selling its stake in the Tube Lines consortium in a £150m deal.
Its 33 per cent share in the venture - which has a 30-year contract to maintain and upgrade the Piccadilly, Jubilee and Northern Lines - was snapped up by Amey, another partner in Tube Lines, which will end up with two thirds of the project. The other third is held by America's Bechtel.
Amey is owned by Spanish construction group Ferrovial and is paying £95.5m. It will assume liabilities of £51.3m.
The deal has enabled Jarvis, which earlier this month warned that it faced imminent collapse, to agree a year's extension to its banking facilities, to March 2006, with lenders led by Royal Bank of Scotland and Barclays. Chief executive Alan Lovell said it had "really got rid of the pressure".
The group is also close to signing a deal that will allow it to complete its troubled Private Finance Initiative construction contracts but remove the bulk of the risk. They will then be sold on. Some £50m of the proceeds from the Tube Lines deal will be put towards these projects.
Jarvis will now focus on its core engineering businesses of rail, road and plant hire, but continue to cut costs. "It will leave us as a lean machine capable of growing profits," said Mr Lovell. This growth will be organic, mainly in the rail business and through expansion into Eastern Europe.
But Jarvis still has delayed results to publish and Mr Lovell conceded they would be "absolutely horrible - we're putting the kitchen sink in". A series of one-off costs - incurred on the PFI contracts, restructuring fees and goodwill writedowns - are expec- ted to total well over £100m.
Jarvis must publish its results before 31 December and now expects to produce them later this week.
Shareholders also have to approve the Tube Lines sale at an EGM on 10 January and the group has warned that failure to do so would see the refinancing package fall through.
Jarvis has net debt of some £260m. Mr Lovell said £100m was his target, adding: "In an ideal world we would bring in a strategic partner to help reduce the debt - someone who could work with us. It's a nice idea, though whether it is possible I don't know." He denied this meant a takeover but said he would be interested in a suitable investor, which could take a stake at some stage in the future.Reuse content