Music school firm fights for survival

THE company employed to develop and manage the Cork School of Music is fighting for survival after its share value plunged dramatically yesterday.

The project contractor Jarvis saw its shares fall by one third on the London Stock Exchange. Their value had already been halved last Friday after the group revealed charges and write-offs that could top £141 million (€210 million) and debts of £230 million (€342 million).

The company now is worth just £39 million (€58 million). Two years ago it had a stock market value of £650 million (€968 million).

While a spokesman for Jarvis in Britain insisted yesterday that the company’s difficulties would not affect the School of Music development, it is bound to raise question marks over a project that has already been dogged by delays and controversy. The firm’s Irish division, Jarvis Projects, is to carry out the project.

Banks, headed by the Royal Bank of Scotland, have given Jarvis until July 30 to produce a recovery plan. One analyst concluded: “The banks are now in charge at Jarvis.”

Preliminary work has already started on a new €60 million Cork School of Music. The Department of Education is due to sign the contract for the Public Private Partnership (PPP) project with Jarvis over the next few weeks. A spokeswoman for the Department declined to comment on Jarvis’s finances or on whether its difficulties would affect the project.

“We are currently in negotiations with Jarvis with a view to achieving closure on the Cork School of Music project. We have no further comment to make,” said the spokeswoman.

A spokesperson for Cork Institute of Technology, of which the School of Music is a constituent, said it was too early to comment.

Under the terms of the project, private partners Jarvis will also be paid €8.2m for 25 years to cover the running costs and maintenance of the school.

Despite Jarvis’s increasingly controversial status in Britain, where its contract work and rail safety record have come in for sustained criticism, its Irish operations have run smoothly. It has already constructed five schools under the Government’s PPP scheme and each is considered a model of development.

“We have had no problems whatsoever with Jarvis,” a spokesman for the Department of Education said at the announcement of the go-ahead last March.

The group has already built five schools, involving a development cost of over €80 million.

A statement from Jarvis in Britain said the collapse in the share price would “not affect our ability to continue to deliver those projects we’ve started.”