Jarvis crumbling as woes deepen

THE executioner's noose tightened around the neck of hapless Jarvis after the cash-strapped contractor issued another bombshell financial update yesterday.

Shares dived 20p, or 61%, to 13p as it revealed that the costs of finishing off more than a dozen local authority and university buildings - allied with sundry other problems - would require £80m more cash.

The stock is now at a five-year low and has lost 90% of its value this year.

The state of Jarvis's finances is so parlous that it has been forced to pay up front to get tradesmen on site.

Planned sales of Jarvis's Tube Lines London underground business and European roads operation have been delayed, meaning that its cash crunch has become acute. Even when it gets its hands on that money - estimated to be as much as £90m - the funds will be used to finance the day-to-day running of Jarvis rather than pay down a debt mountain estimated at £240m.

Its banks - including Barclays and Royal Bank of Scotland - are backing new chief executive Alan Lovell who has been in the job less than a month.

In July they gave Jarvis a stay of execution until next March to allow it to sell off some of its more valuable assets and reorganise its finances.

Lovell, who met the banks yesterday, reckons he can still count on their backing. 'They are supporting the business,' he said. 'Banking facilities remain in place through to March 2005.'

Jarvis handed back rail contracts after the Potters Bar rail crash in 2002 and was slated for paying bonuses to directors in charge at the time.

To add to its woes, Jarvis yesterday confirmed that it has been axed from a £92m Norfolk County Council contract to extend and refurbish 37 schools.