Jarvis 'seeking extra ?20m loan

Jarvis, the heavily indebted rail and construction group, was plunged into further turmoil yesterday as its bombed-out share price dropped a further 15% on talk that it has been forced to return to its banks for more cash.

Speculation was rife in the market that Jarvis, which has hired NM Rothschild to help it to thrash out a huge refinancing, has asked its banks for a further £20m to see the business through to August.

In a statement Jarvis, which is nearly £300m in the red, noted the speculation but merely reiterated that it is "discussing with its lenders both its short term working capital requirements and the longer term objective of restructuring its funding and capital base".

Management is understood to view talk that they need more cash as "mischief-making" by the big US institutions which own the firm's debt and are trying to strengthen their position ahead of a refinancing.

The company was brought low by a series of train derailments on tracks it maintained, most notably the Potters Bar rail crash in 2002. Its share price has collapsed and yesterday dropped a further 1.5p to 9p - a mere 1.5% of the price the shares reached before the Potters Bar crash.

The company is working on a debt for equity swap in a move similar to the refinancing of Marconi two years ago.

Jarvis's original main creditors have sold on about £250m worth of loans to a dozen US financial institutions. A similar group of debt specialists bought out Marconi's debts before the business executed its swap. In the debt market Jarvis loans have been trading at below half their face value. Two months ago it emerged that Jarvis had borrowed £17m on top of £280m it already owed to meet short-term working capital requirements.

Traders said yesterday that the company was rumoured to have told its banks that it needs a further £20m for unspecified one-off costs and that the money would see the business through to August.