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Rival firms set sights on Jarvis PFI operation

NEWS - Potential buyers express interest for loss-making Jarvis division

RIVAL firms are circling the loss-making Private Finance Initiative division of Jarvis as it looks to try and stay afloat before banking support runs out next spring.

The division posted a whopping operating loss of £161 million in the year to July but a number of buyers are eyeing up the arm, called Jarvis Accommodation Services, in the hope they can get it on the cheap.

In its results Jarvis put the losses at JAS down to an 'unusually low success rate in winning PFI projects which resulted in unrecovered bid costs' JAS specialises in building and running schools under the Private Finance Initiative but has also worked on several other non-education PFI schemes, including an army training college in Harrogate, North Yorkshire.

Construction News understands an information memorandum has been drawn up detailing what contracts potential buyers can pick up.

One insider said: 'A lot of people want to have a look at it.JAS is basically an FM business with a number of long-term deals already up and running.'

Hochtief, Wates and Skanska, which all have specialist PFI operations, have been linked with tabling an offer for the arm, while several other bidders are expected to emerge in the coming weeks.

Laing O'Rourke is also understood to be interested in picking up the building contracts, worth over £160 million, on four schools deals on which JAS is preferred bidder.

The largest is a £76 million deal to build 37 schools for Norfolk County Council but, after the firm was ditched from preferred bidder status on the £92 million Fife schools project last month, one rival said: 'If you're a local councillor in Norfolk are you going to sign a PFI deal with Jarvis?'

Jarvis is already selling part of JAS, its university accommodation business called University Partnerships Programme, to the Alma Matter Fund, which was previously a partner in the venture.

One source said: 'People aren't interested in buying the whole of Jarvis but among all the problems there are some decent contracts there.They are sitting on a few long-term deals which look quite juicy.

A lot of us are taking on their staff. People are having a nibble at the moment.'

A Jarvis spokesman said it had not had any bids for JAS but admitted: 'It's unsurprising that people are talking to us about our businesses.'

Last month lenders gave Jarvis an extra £25 million of banking facilities but these run out on March 25 next year.