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Troubled support services group Jarvis has appointed a chief executive of its accommodation services business, despite having publicly stated that it intended to close that side of its operations.

Jarvis has hired Robert Horvath, a former managing director of Interior Services Group, to oversee the construction of its final PFI schemes, and to help to sell the facilities management business, which has given the firm difficulties.

A spokesperson for Jarvis said: 鈥淩obert has been brought in with a remit to oversee the conclusion of the construction of 14 major PFI projects, and will be involved with the sale of the FM business.鈥�

Projects still under way include the Kirklees schools programme in West Yorkshire and the Whittington Hospital scheme in London.

Horvath, who joined Jarvis this month, will report directly to chief executive Alan Lovell. It is expected he will leave the company once the construction programme and sale of the FM business is completed.

Shares in Jarvis rose 12% to almost 9p on Tuesday, when the company announced it had entered into 鈥渂inding documentation鈥� with Deutsche Bank to borrow a further 拢31.4m. It has been given a deadline of 31 August to pay it back.

Jarvis also said that it had agreed a 拢300m debt-for-equity swap with its lenders, revealing a higher level of debt than some observers had expected.

One source close to the company said: 鈥淭he debt figure is higher than expected, but the big test now is whether they have managed to get overheads down.鈥�

Lovell said the restructuring marked 鈥渋mportant progress towards our goal of restructuring Jarvis鈥� balance sheet and substantially reducing its debt level.鈥�

However, he warned that trading in the second half of the year, to 1 March 2005, had 鈥渞emained challenging鈥�.

He sounded a downbeat note, saying: 鈥淭he directors acknowledge that forecasting in the group鈥檚 current position is inherently difficult, that financial headroom is minimal and so there is little margin to accommodate any adverse trading or other developments which might have an impact on the group.鈥�

The swap means the value of existing shares will be significantly diluted. While the restructuring means that extra shares will be issued to Jarvis lenders, leaving existing shareholders with less than a 5% stake, it was welcomed by some this week, who considered that a conversion was the only answer, as interest payments would have been difficult for Jarvis to meet.

Arbuthnot analyst Stephen Rawlinson said: 鈥淭he real issue is, will they still get work going forward?鈥�