Amey scraps payout and puts itself up for sale

Internal links

Outlook

The crisis at Amey, one of the companies selected to take over the London Underground, deepened yesterday as the troubled PFI contractor scrapped its interim dividend and put itself up for sale.

Amey said the decision not to pay the 1.16p dividend announced in September had been taken because its acting finance director, Eric Tracey, now judged that the company had insufficient distributable reserves to meet the £2.9m cost.

The announcement sent the shares plunging by 15 per cent and cast further doubt over the future of Amey's embattled chief executive, Brian Staples, who is already facing shareholder pressure to quit. Amey also disclosed that it was in discussions with its lenders, although it said it considered that its bankers remained supportive.

A review of the business is being conducted by the investment bank Hawkpoint Partners, alongside its existing financial advisers Deutsche Bank. A spokesman said: "This will look at everything from sale to merger to break-up."

Mr Tracey was brought in from Deloitte & Touche last month when the previous finance director, Michael Kayser, quit after just five weeks in the job after a dispute with Mr Staples over Amey's accounting policies.

The acting finance director has now taken a similar view of Amey's balance sheet and decided it will need to make heavy asset write-downs, thought to be in the region of £90m-£100m. Apart from weakening Amey's reserves, this will also put it in breach of some of its banking covenants. Despite the growing crisis, the spokesman insisted Mr Staples would not be quitting, saying he was needed to help conduct the review of the group's accounts announced last month and bring the Tube PPP deal to a final close.

Amey's financial crisis has been brought about partly by its accounting practices and partly by its failure to close the London Underground contract, which has eaten up £23m in bid costs.

There was a further setback yesterday when it emerged that there would be a further one-month delay until December before Tube Lines, the consortium in which Amey has a one-third stake, signs the contract to take over the Northern, Piccadilly and Jubilee lines.