Jarvis this week warned shareholders that it was only weeks away from collapse if it failed to sell its 拢100m stake in the London Underground Tube Lines consortium

Shares in the company dropped 18%, or 2p, to 9p on Monday, after it said that without the sale of Tube Lines, it could not secure the refinancing required to keep the business afloat.

Jarvis said: 鈥淚n the absence of a refinancing, emergency funding of working capital would be required by the second half of January 2005. Such funding cannot be guaranteed, nor can its terms, which may be materially disadvantageous to shareholders. If such support were not forthcoming, the group would be unable to continue to trade.鈥�

Jarvis had agreed a credit extension with lenders until 25 March, but said that it now needed to agree a further extension by January.

The firm is currently in exclusive talks to sell its Tube Lines stake to Star Capital.

At the same time as it issued the warning, Jarvis urged shareholders to agree to a 拢25m sale of property interests to Network Rail, in order to boost its dwindling cash base and buy itself time with the banks.

The company has about 拢240m debt outstanding. Two weeks ago 黑洞社区 revealed that problems had emerged on two of its remaining contracts in London and Lancaster (26 November, page 9), and this week Jarvis said that 鈥渃ash flow pressures endured by the group since September have proved materially worse than anticipated鈥�.

Alan Lovell, chief executive, attempted an upbeat stance in the face of growing difficulties. 鈥淎 great deal remains to be achieved but we are confident of a satisfactory conclusion,鈥� he said.

On Tuesday, Jarvis said it had completed the sale of its 拢1m University Partnership Programme bidding and management business to Alma Mater Fund, as well as the sale of its PFI bidding business to German firm Hochtief for 拢1.2m.

Jarvis said it was hopeful that it would have sold off its European roads business, estimated to be worth about 拢20m, as well as its Tube Lines stake, by the end of December.

鈥淎 programme to achieve annualised future savings of more than 拢20m has been implemented ahead of plan,鈥� said Lovell.

鈥淚n recent weeks, further annualised savings of 拢30m have been identified and action to achieve these savings is under way.鈥�

But the long-term outlook for the company looked bad this week, as Jarvis warned that results for the six months to 30 September 2004, to be published by the end of December, would 鈥渟how a substantial deterioration in the group鈥檚 financial position鈥�.

Two years ago the company had a market capitalisation, or total value of shares, of 拢1bn; it is now worth about 拢11m.

Lovell was drafted in October and has embarked on a restructuring plan, intending to strip Jarvis down to a road and rail maintenance company in the UK in order to stabilise the business.