Troubled rail contractor Jarvis mulls emergency fund raising

Jarvis, the troubled rail contractor, is mulling a rescue rights offer to shore up its creaking balance sheet.

Jarvis, the troubled rail contractor, is mulling a rescue rights offer to shore up its creaking balance sheet.

Shares in the company, the maintenance contractor at the centre of the Potters Bar crash inquiry, fell 17 per cent yesterday after one large investor baled out just before the market closed, selling 24 million shares or 17 per cent of the company. A total of 35 million Jarvis shares changed hands - five times the normal daily volume.

The company may be forced to make a statement to the London Stock Exchange today clarifying its position, although it is not expected to launch any offer to shareholders.

Last month the company, which is chaired by Steven Norris, the Tories' London mayoral candidate, began a strategic review. A spokesman reiterated last night: "Nothing is ruled in and nothing is ruled out."

The company posted its second profit warning in three months in April and said it was reviewing its dividend policy. Jarvis is also looking for a buyer for 50 per cent of its one-third stake in Tube Lines, the consortium which has taken over part of London Underground.

Although the company's finances are stretched, it said last month that it remained "covenant compliant" and was not in breach of any loan agreements with its banks.

The rumour in the market yesterday was that Jarvis is considering a deeply discounted rights issue or placing an open offer to raise about £70m. Last night its shares closed 14.75p lower at 71.75p, valuing the company at £102m.

The Jarvis share price has collapsed from a high of 380p in the past 12 months on the back of two profit warnings and adverse publicity from the Potters Bar crash that killed seven people. Last month Jarvis and Network Rail formally accepted liability for the crash which happened after a set of points became loose just outside the station, derailing a commuter train.

Last October, Jarvis quit all track maintenance work for Network Rail just days before the infrastructure company announced it was taking maintenance back in-house across the network.