[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 5 July, 2004, 16:18 GMT 17:18 UK
Jarvis 'struggling for survival'
Crisis-hit construction and engineering firm Jarvis could collapse by the end of the month, experts have predicted.

The claims came as a third was wiped off its share price in the wake of a warning over spiralling write offs.

To add to its woes the firm has also been fined 400,000 after pleading guilty to a health and safety law breach over a derailment in Rotherham.

On Friday the firm's shares plunged 50% after it warned charges, write-offs and debts could top a total of 371m.

The group said charges and write-offs were set to soar to 141m, with debts set to rise to 230m - against 83m last year - as a result of it quitting the rail business.

'Slippery slope'

Banks have given the firm until July to produce a rescue plan, but experts say an assets sale or bankruptcy lies ahead.

Arbuthnot Securities analyst Stephen Rawlinson told BBC Radio 4's Today programme that the firm has been "overly aggressive" for years in assessing the cost and revenues of its projects and "fundamentally its got quite a few of these wrong".

"The banks must actually step in now... The slope is very, very steep and I think we're on the peak of that slope and we're going to go down very rapidly.

"Jarvis in my mind will struggle to get to the end of July."

And he offered little hope to the company and its investors, urging contractors and suppliers to check the terms of their contracts.

Parents and teachers need urgent clarification that there will be no disruption or crisis within schools or universities if Jarvis is unable to continue operating
Vince Cable, Lib Dem treasury spokesman
But if the firm does continue in business it is likely to carry on in a different form.

Howard Seymour, Bridgewell Securities director of equity research, told BBC Radio Five Live: "I think the banks will be looking for an asset disposal to tell the truth. I think they're going to have to sell off at least a couple of divisions to pay for the bank debt."

He added that by the close of trade on Friday the firm was worth just 40m - not enough to pay its huge debt mountain, of 230m and rising.

Catalogue of problems

Mr Seymour also said that "reputational problems" had recently dogged its accommodation division and other businesses.

Shares in Jarvis ended Monday down 31% or 11p to 24p, but up from day lows of 18p.

That followed Friday's sharp sell-off , sparked by its warning that charges and write-offs after it quit the rail maintenance business have been compounded by problems at its accommodation services division.

On Friday it said costs, related mainly to that division, would exceed 115m.

JARVIS PROJECT WOES
Tracks at Potters Bar
JUNE 2004 - Rotherham - fined 400,000 for faulty repairs in relation to derailment in January 2002
JUNE 2004 - Norfolk - 25-year contract to refurbish 37 schools - delayed
MARCH 2004 - Network Rail says no evidence the October maintenance certificates were deliberately falsified
FEBRUARY 2004 - Brighton - 105m contract to redevelop and manage four schools - council brands work "unacceptable"
NOVEMBER 2003 - Wirral - 55m project to build and maintain nine schools - four sites unable to open on time
OCTOBER 2003 - railway maintenance investigated after track not properly reassembled at Alexandra Palace, London
OCTOBER 2003 - Network Rail launches investigation into claims the firm falsified documents relating to rail maintenance work
In December, the operation drew harsh criticism when it was revealed that it had failed to finish work on time at five out of eight schools as part of a 55m improvement scheme on the Wirral, Merseyside.

Two months later it was attacked by Brighton and Hove Council for "unacceptable" work on a 105m contract to redevelop and manage four Brighton schools.

The catalogue of problems triggered the resignation of its accommodation services chief executive earlier this year.

Jarvis also revealed that it would take a 26m hit in relation to its dealings with Network Rail.

Its public image was shattered after a series of train derailments, including the 2002 Potters Bar crash, which saw it pull out of the rail maintenance arena.

Fears surrounding the company have prompted Liberal Democrat treasury spokesman Vince Cable to warn that it would mean "chaos" for dozens of schools and universities where the firm has won rebuilding management and maintenance contracts under Public Funding Initiatives and Public Private Partnerships.

Mr Cable wrote to education secretary Charles Clarke demanding urgent clarification of whether any contingency plans were in place in the event of the group going bankrupt.

"Parents and teachers need urgent clarification that there will be no disruption or crisis within schools or universities if Jarvis is unable to continue operating," he wrote.




SEE ALSO:
Debt worries hammer Jarvis shares
02 Jul 04  |  Business
Fight goes on for victims' families
27 Apr 04  |  Beds/Bucks/Herts
Teachers' concern over Jarvis
16 Apr 04  |  Business
Jarvis wins Potters Bar rail work
24 Mar 04  |  Business
Axe falls on rail signalling jobs
09 Mar 04  |  South Yorkshire
Jarvis schools project under fire
11 Nov 03  |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific