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Jarvis shares drop on surprise sell off

Shares in struggling Jarvis today fell 15 per cent today after the group shocked investors with news of the potential sale of its roads maintenance business.
The company's stock fell more than a penny to 6.24p after it said it was in advanced talks to sell the highway maintenance division to services firm Accord.

Jarvis has been selling off businesses like its lucrative stake in the Tube Lines London Underground maintenance consortium as part of efforts to secure sufficient working capital to next March.

The firm has been battling for survival after over-stretching itself on contracts, particularly in the area of private finance initiatives. It is selling non-core businesses to focus on UK rail renewal, roads and plant hire work.

The roads business has been struggling to win new work and to keep existing contracts, including a significant deal with Cheshire County Council.

The company said in its final results on Friday that a write-off of goodwill in the division had been partly responsible for a rise in annual losses to £353.8 million from £256 million last year.

A spokeswoman said the company had given a strong indication on Friday that the roads business had been struggling.

She added: 'Due to ongoing negotiations at that time, we were not in a position to say it was up for sale or in the process of being sold.'

One analyst described the sale plan as a surprise.

'I don' t know if that leaves it with anything apart from rail operations,' the analyst said.

'These must be desperate times.'

Jarvis said the disposal would include its 80 per cent stake in Herefordshire Jarvis Services, a venture with Herefordshire County Council, and its 50 per cent holding in joint venture Accord Jarvis.

The company said the deal would be subject to due diligence, contractual documentation, consent from Jarvis' lenders and potentially to approval by shareholders.

It will leave the roads division with its core branded Prismo businesses, which provide road marking services to local authorities, and Somerford Equipment, which provides vehicles and equipment for Prismo.

Welwyn-based Accord supplies roads, housing, environmental, business, consultancy and professional support services to local authorities, the Highways Agency and housing associations.

Jarvis is asking its investors to approve a debt-for-equity restructuring that will leave them with 4.75 per cent of the company.

It said on Friday that its auditors were likely to modify their report to highlight the 'fundamental uncertainty in respect of the ability of the group to continue as a going concern'.

However, it said its continuing businesses of road products, rail renewal and plant hire had shown 'remarkable and heartening resilience' .