Jarvis seeks refinancing

Debt-laden support services group Jarvis warned today it faces a bleak future unless it completes a financial restructuring over the next month.

The group said emergency funding of working capital would be required by the second half of January if it failed to agree a refinancing with lenders.

The warning came as Jarvis urged shareholders to back a series of property deals set to boost its finances by around ?25m. They include the sale of the leasehold on Jarvis House at York, and further deals with Network Rail relating to five interests close to York station.

As well as the property disposals, Jarvis is looking to realise value from its London Underground Tube Lines investment and its European roads businesses to make progress with the refinancing project.

In the meantime, Jarvis said trading continued to be difficult, although the performance was consistent with an update a month ago.

The group said one of the major problems facing it had been that cash flow pressures were affecting terms of business with sub-contractors and impacting on the company's ability to meet deadlines and cost targets.

Recently-appointed chief executive Alan Lovell said today's proposed property disposals marked "a very important step in our strategy".

He added: "We continue to talk to our lenders about refinancing for the group. A great deal remains to be achieved but we are confident of a satisfactory conclusion."

The group has been scaling back its accommodation services division to focus on UK rail renewal, roads and plant hire work. It handed back its rail maintenance contracts to Network Rail following a number of derailments and its involvement in the Potters Bar rail crash.

Jarvis warned that the refusal of shareholders to approve the property deals was likely to have a "material adverse effect" on the willingness of lenders to enter into a refinancing and on the group's ability to continue to trade.

It also said a material adverse change in its businesses could also impact on its ability to achieve the refinancing.

Jarvis said: "In the absence of a refinancing, emergency funding of working capital would be required by the second half of January 2005. Such funding cannot be guaranteed, nor can its terms, which may be materially disadvantageous to shareholders.

"If such support were not forthcoming, the group would be unable to continue to trade."