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.
