- The Guardian,
- Thursday October 14 2004
Jarvis said yesterday it was pulling the plug on future Private Finance Initiative (PFI) contracts and has sold its bidding team to Vinci of France.
The move is an acceptance that the company's fragile financial position is damaging its chances of winning new business and comes on the eve of what is likely to be a stormy annual meeting.
The troubled British firm, chaired by former Conservative minister Steve Norris, said it would use the proceeds of the sale to help reduce debt but the amount is believed to be only about £5m.
Such initiatives are unlikely to blunt the anger of shareholders, who have watched Jarvis run up losses of £256m last year and yet saw bonuses paid to senior executives.
The company, whose repu tation took a hammering over the Potters Bar train crash, is struggling to cope with a £230m mountain of debt.
Jarvis lost its chief executive Kevin Hyde two weeks ago - the sixth top director to exit the firm within 12 months.
Shares in the company, already down to 34.5p from a year high of 218p, fell a further 1.5% yesterday to 34p.
Jarvis has securitised its equity holdings in PFI schemes such as Kirklees and Wirrall schools.
It is still a one-third owner - alongside Bechtel and Amey - of the Tube Lines business, which has taken over part of London Underground but this holding is also up for sale.
PFI has been trouble for many former construction firms which have moved into support services, with Amey being bought by a Spanish firm after financial woes.
Jarvis is a preferred bidder for four PFI schools projects in Manchester, Norfolk, Bangor and Cork.
These schemes will be taken over by Vinci Investments, an arm of the larger Paris-based Vinci construction group.
The sale of the business is still "conditional on due diligence and completion of documentation", said Jarvis.
Vinci is already working on various UK contracts including a section of the Channel Tunnel rail link to St Pancras station in London.
If Vinci wins the contracts in Manchester and Norfolk it is expected to use Jarvis to perform facilities management.
The Association of British Insurers issued a "red top alert" to demonstrate serious corporate governance concerns about the bonuses paid to Mr Hyde and former chairman Paris Moayedi.
