Amey may have to pay £200m to free itself from a PFI contract to repair Birmingham’s roads

Troubled outsourcer Amey is preparing to pay more than £200m to free itself from a botched 25-year PFI contract to repair Birmingham’s roads.

Terminating the deal would allow the Spanish infrastructure giant Ferrovial to sell Amey, one of the government’s biggest suppliers, which has been dragged down by a string of problematic deals.

Amey has waged a five-year legal battle with Birmingham city council over their £2.7bn deal, but sources said the company was nearing an agreement on an exit. It is believed to have made several previous attempts to extricate itself.

The negotiations could yet falter because the local authority is holding out for a settlement of more than £300m, sources said.

The deal to maintain Birmingham’s 1,600-mile road network is one of the