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EDITIONS
Thursday, 7 November, 2002, 17:42 GMT
Tube firm dismays investors
Tube escalator
Amey is in line to help run three London tube lines
British engineering firm Amey, one of the private firms in line to run the London Underground, has said it does not have enough cash to pay a shareholder dividend.

The company said on Thursday it was suspending the planned dividend payment of 1.16p per share, citing 'insufficient cash reserves."

Amey also admitted that it was in talks with its creditors, saying that it considered its bank lenders 'supportive.'

The news dismayed the City, where Amey shares fell 14% to 26p in late afternoon trading.

Amey's share price has now fallen by 92% since the start of the year.

Accounting troubles

The sharp decline partly reflects a loss of investor confidence after the firm changed the way it accounted for costs and revenues stemming from its private finance initiative (PFI) projects.

Under PFI, private sector firms fund the construction or maintenance of public service facilities such as schools or hospitals in exchange for a guaranteed revenue stream from the government over several years.

Investor sentiment towards Amey has also been damaged by the shock resignation of two finance directors in quick succession.

Amey also said on Thursday that it had appointed finance experts Hawkpoint Partners to advise on ways of 'rebuilding value in the group.'

The company has previously faced calls from shareholders to break itself up or put itself up for sale as a means of restoring some of its market value.

Tube contract

Amey's shaky finances have cast doubts over its participation in the Tube Lines consortium, which is in advanced talks with the government over taking up a contract to run and maintain the London Underground's Northern, Jubilee, and Piccadilly lines.

Spokesmen for the consortium said on Thursday that the deal would go ahead as planned.

Also on Thursday, London Underground said it had postponed signing the contract to partly privatise the tube until 7 December, about a month later than originally expected.

See also:

16 Oct 02 | Business
11 Sep 02 | Business
10 Sep 02 | England
11 Jul 02 | Business
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