NOBODY can accuse Alan Lovell of ducking a challenge.

The former accountant’s previous jobs include rescuing Costain, the construction group that was once poised to go bust. Then he helped to save Dunlop Slazenger, the sports manufacturer.

Now Lovell has been parachuted in as chief executive of Jarvis, the troubled infrastructure to track-renewal group that has breached its bank covenants. He was encouraged to take the post by Royal Bank of Scotland, one of the lead creditors at Jarvis and a former lender to both Costain and Dunlop Slazenger.

At the end of September, Lovell agreed to have breakfast with Jarvis chairman Steven Norris. Two weeks later he had taken the job and, as a mark of goodwill, the banks have effectively agreed that if the company goes bust he will still get a £225,000 one-off payment.

For Lovell, this unusual agreement proved how much the banks wanted him to take the job. But if he is paid the money, he would regard his tenure as a failure. Lovell firmly believes he can save Jarvis, even though sceptics say the odds are stacked against him.

If he does, on top of his £375,000 salary (and £75,000 pension), he will receive a bonus of up to £450,000.

To the banks and American loan-note holders, that is a small sum compared with what is at stake for them. A syndicate of banks led by Royal Bank of Scotland and Barclays are owed some £125m, while the note holders, who provided capital through a private placement, are owed about the same. This debt is mainly held by Prudential of America and New York Life.

On top of this there is an additional £70m in the form of performance bonds secured against Jarvis’s 14 private finance construction contracts. Then there are the co-investors in these projects — Smif, the secondary market infrastructure fund, Barclays Private Equity and Alma Mater — a joint venture between Barclays Private Equity and 3i.

For Jarvis shareholders it is probably too late. Their equity is almost worthless and they will eventually be heavily diluted by a fund-raising exercise.

K Capital, the aggressive vulture fund, thought it had spotted an opportunity to make money. In recent months it built up a 22% stake in the company, but it badly misread the situation and has now baled out, taking a big loss in the process.

At their peak six years ago, Jarvis shares touched 787p, valuing the company at £1 billion. On Friday the price closed at 9p, valuing it at £14m.

Lovell compares the financial mess at Jarvis with the challenges he faced when he took charge at Costain. When he arrived, that company was losing £340m a year and debt had peaked at £450m.

Jarvis is probably more complex. The group is paying the price for recklessly over-extending in the 1990s when it was headed by Paris Moayedi, the group’s founder and former chief executive. It took on too many private-finance projects for schools and universities on contracts that would never stand the test of time.

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