Contractor in 'urgent' need of cash
A major housing maintenance contractor has said it urgently needs cash to pay its contractors and suppliers.
In a statement to the City, Connaught plc said it has started negotiations with its lenders and will breach its banking covenants.
The group said it had an ‘urgent requirement for additional funds’ in part ‘caused by additional pressure from suppliers and contractors’.
It said would exceed its net debt prediction of £120 million at the end of August but added that the talks to get additional funding had been ‘constructive’.
The statement said the group was reviewing its trading performance and the implications for its full year financial performance.
The group’s chairman Sir Roy Gardner has bought in three new directors. Former British Energy Group finance director Stephen Billingham will work on funding and finance, Roger Wood, former managing director of British Gas Services and the AA, will focus on cost savings, and Michael Young, former corporate affairs director of Centrica will advise the board on communication and review management processes.
Connaught’s business development director, Chris Sellers, takes over as acting chief executive of the group’s social housing business. He is standing in for Peter Jones who has been suspended while the company investigates allegations that he sold shares days before a major profits warning.
The company has also commissioned a review of accounting policies at the firm.
Its chief executive Mark Tincknell and finance director Stephen Hill announced last month that they would leave. Mr Tincknell quit immediately citing the need to recover from health problems and Mr Hill will go in October.
The firm’s share price has plummeted on the back of a statement in June that the company expected an £80 million reduction in revenues as councils postponed social housing work following the emergency budget.
The firm’s chair Sir Roy Gardner said: ‘These are challenging times for Connaught. We are fortunate that we have been able to attract a number of senior and experienced individuals to support the company at this time and we welcome the constructive discussions with our lenders.
‘We continue to place great importance on the solid relationship we have built with our supply chain and customers and the continuing support we receive from our employees.’
The company’s share price has plummeted from around £3 three months ago to 34.74p on Tuesday.
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Readers' comments (7)
Melvin Bone | 27/07/2010 3:40 pm
'Peter Jones who has been suspended while the company investigates allegations that he sold shares days before a major profits warning.'
I hope thats not the Dragons Den chap.
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kipzilla | 27/07/2010 4:43 pm
I tried ringing him to find out but just got an answerphone message saying "I'm out"
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Chris | 27/07/2010 10:34 pm
Oh Melvin, what a shock if it were such a wonderful free market capitalist fiddling the system. I think it is probably just a name coincidence, but the there are so many of those you support so strongly that are fiddling for all we are worth until we are bled dry. But just try being a tenant asking for tuppence and the four riders of the apocalypse will descend!
I'm so glad our government has every faith that private enterprise will save us all.
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Melvin Bone | 28/07/2010 8:08 am
'I'm so glad our government has every faith that private enterprise will save us all.'
Well they cannot do any worse than the last lot!
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Anonymous | 28/07/2010 9:14 am
This whole thing is a nightmare for my RSL, but my greatest concerns lay not with the fat cat management of these organisations who are only worried about losing their expensive cars or big houses. What about the employees with the threat of no job in the next few weeks? Their money worries are just beginning.
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Anonymous | 28/07/2010 12:48 pm
"Fat cat free-market capitalist".
Turn to Ms Eaton, chair of the LGA. She told us today that local government can save £100bn over the next four years.
There appears to be an awful lot of fat - and lots of really well-endowed - cats in the public sector poncing on the taxpayer.
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Chris | 28/07/2010 10:19 pm
Melvin Bone | 28/07/2010 8:08 am
'I'm so glad our government has every faith that private enterprise will save us all.'
Well they cannot do any worse than the last lot!
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Private enterprise always does well for itself, thats the point of private enterprise. They can not do worse than the 'last lot' as they are the 'last lot'!
The point is that private enterprises are meant to grow rapidly in response to the mass public service cuts and create the jobs to replace the public service jobs removed. Osborne conveniently failed to mention the many private sector jobs dependent on public sector contracting. Perhaps he forgot that since the 1980's local services have been tendered out to the private sector.
Keep wearing the blinkers Melvin, they suit you.
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