Jarvis achieved a breakthrough in its battle for survival today after agreeing a disposal of its stake in Tube Lines worth nearly £147 million.

The financial lifeline, which comes from the sale of a 33 per cent stake in the consortium for the London Underground business, forms a key part of the company's battle to secure the support of creditors into the new year.

Jarvis is saddled with debts of more than £230 million and recently warned it could go under if it did not secure refinancing by the middle of January.

Today's deal, which needs the support of shareholders at a meeting on January 10, increases the Tube Lines interest of Amey - owned by Madrid-based Ferrovial - to 66 per cent.

American company Bechtel has the remaining stake in the consortium, which holds the contract to maintain and modernise the Jubilee, Northern and Piccadilly lines under the Government's Public Private Partnership scheme.

Jarvis said its financial position would be "substantially enhanced" following the transaction, which raised more than many analysts had been expecting. The company said that with the successful completion of the Tube Lines sale lenders would extend credit facilities until March 2006.

But it warned that its finances would continue to be "very tight" until the completion of the deal.

News of the deal sent Jarvis' shares up 21 per cent or 3.15p to 18p, valuing the company at around £25 million.

Chief executive Alan Lovell - a turnaround specialist who was brought in to run the company in October - said he was more optimistic about prospects.

"The disposals we have now agreed will provide the much needed working capital and pay down of debt that were conditional to the refinancing agreement we have reached with our lenders.

"I am confident that we can now move forward in 2005 toward rebuilding Jarvis and return it to growth as a profitable business in future with its roots in these viable core operational areas."

Jarvis' problems started in May 2002 when a train was derailed at a damaged set of points outside Potters Bar station in Hertfordshire, southern England.

Jarvis engineers had been working to repair the track at the time and the company has since agreed- without admitting negligence- to pay compensation to the victims.

Although it has since ditched its rail engineering business, the company's problems continued after it overpaid for the rights to run so-called private finance initiative (PFI) contracts with the UK government.

Work on a number of those projects stopped recently after Jarvis ran out of cash.

As part of its rescue plan, Jarvis plans to exit from all of its PFI arrangements and focus instead on plant hire and building roads and railways for Network Rail and local authorities

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