Connaught nears administration

The FTSE 250 company, which for the last few weeks has been in emergency talks with its creditors, has issued a statement to the stock market saying it ‘believes that the availability of additional funds from its lenders will not be forthcoming’ and suspending the trading of its shares.

The company’s troubles first came to light in June when it announced an £80 million reduction in revenues as councils postponed social housing work following the emergency Budget. Chief executive Mark Tincknell and finance director Stephen Hill announced they were standing down.

It later said it expects to make ‘significant write-downs’ to the value of its assets compared to last year.

Since then Barnet Homes and Solihull Council have said they are ending contracts with Connaught and housing associations which hold contracts with the firm have been drawing up contingency plans.

The Royal Bank of Scotland provided the firm with an emergency £15 million loan in July and has, along with other creditors, spent the last few weeks talking to Connaught about the firm’s future.

However the statement issued this morning says although Connaught ‘remains in discussions with other parties, the ability to provide an adequate solution to the funding issues the group faces has become increasingly uncertain’.

It adds that a further announcement will be made ‘in due course’.