Jarvis wins a breather after Tube sale stalls

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The Independent Online

Jarvis, the support services company on the brink of bankruptcy, will on Thursday reveal that it has yet to secure a buyer for its investment in the London Underground.

Jarvis, the support services company on the brink of bankruptcy, will on Thursday reveal that it has yet to secure a buyer for its investment in the London Underground.

The sale of its third stake in Tube Lines, which operates the Jubilee, Northern and Piccadilly lines, is estimated to be worth more than £100m and critical to the future of Jarvis, which is in breach of its banking covenants.

But the company, chaired by former Tory minister Steven Norris, will announce some good news. It is understood that Jarvis's bankers have agreed to wave the breaches to its covenants for another month. Barclays and Royal Bank of Scotland agreed to the extension after seeing an independent report on Jarvis's finances by accountancy firm Deloitte.

Most City analysts have stopped predicting Jarvis's turnover or profits because of the uncertainty surrounding the group after it made write-offs.

In the past two years Jarvis has been rocked by scandals. It has been widely criticised for its handling of the rail crash at Potters Bar, where it was responsible for maintaining the track. More recently, the company has been attacked for its record on a number of school refurbishment projects.

Jarvis was once a darling of the stock market, seen as being well positioned to capitalise on Labour's programme to modernise public services. But the run of bad news has shrunk its market capitalisation to £57.8m, almost a quarter of the value of its debts.

Thursday's announcements will come as Jarvis presents its delayed financial results and the conclusions of a strategic review.

The company is expected to scotch rumours that it will sell its so called "accommodation services business", which includes its Private Finance Initiative investments.

Jarvis will also say that it is committed to road maintenance and rail renewals. But chief executive Kevin Hyde, will announce detailed changes to the operation of these businesses.

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