Jarvis Plc, the UK engineering firm whose debt is almost 10 times its market value, agreed to sell its stake in London's subway to the Spanish builder Grupo Ferrovial SA for £146.8 million (US$283 million) to avoid collapse.
Jarvis's 33 percent of Tube Lines, the group upgrading three of the British capital's 12 subway lines, will be bought by Ferrovial's British unit Amey, which already owns one-third of the venture. Lenders agreed to extend existing credit by a year and to provide a further £5.5 million of loans, York-based Jarvis said.
Once the UK's biggest construction and engineering business, Jarvis faced collapse after racking up debt of £240 million. Chief Executive Alan Lovell said on Dec. 6 the company might be wound up next year without fresh financing arrangements.
Jarvis will get £95.5 million pounds for the stake and the buyer will assume liabilities totaling £51.3 million pounds.
For Ferrovial, Spain's third-largest builder by sales, the purchase furthers a strategy of expanding in businesses outside construction.
The purchase will add £260 million in revenue next year, Ferrovial said.