Connaught on brink of collapse as lenders walk away
Social housing firm Connaught looked to be on the brink of collapse today after lenders refused to offer additional support to the stricken company.
The Exeter-based repair and maintenance specialist has been in turmoil since its June warning that government spending cuts could blow a £200m hole in revenues over this year and next.
Amid speculation that it could be placed into administration as early as today, Connaught requested the suspension of trading in its shares and said a solution to its funding issues was "increasingly uncertain".
It is in discussions with other parties but added that its lenders were unlikely to provide additional funds.
The firm, which employs 10,000 people and has around 180 multimillion-pound social housing contracts in the UK, has been in talks with its lenders after a review identified an "urgent requirement" for additional funds to meet current and ongoing business, in part due to pressure from suppliers and contractors.
Royal Bank of Scotland recently provided Connaught with a further £15m in an attempt to keep the group going, the BBC said today.
Sir Roy Gardner, who recently became chairman of the company, has attempted to put together a rescue plan with the help of several new directors.
But the BBC said bank creditors have decided instead to put the business in administration, under UK insolvency procedures.
Until their suspension today, the company's shares had fallen by more than 90% following the warning in June that it had identified 31 projects where spending will be delayed as a result of austerity measures, wiping £80m off revenues and £13m from underlying profits in this financial year.
Sales and profits were also expected to fall by a further £120m and £16m respectively next year, it added. Connaught's debts were estimated to be in region of £220m.
Founder Mark Tincknell left the company earlier this year on health grounds less than six months into his second spell as chief executive.