TROUBLED social housing repair firm Connaught put most of its business into administration yesterday, after its lenders refused to further fund the company.
The FTSE 250 component said last night that its public sector business will be put into the hands of administrators KPMG, though its environment and compliance arms will remain in operation.
The company suspended trading of its shares yesterday morning, and later said in an announcement to the stock market: “Following extensive discussions with the group’s secured lenders, it is now clear that sufficient support would not be extended to the group as a whole to enable it to continue trading as a going concern.”
It added that an update on funding for its remaining business would be made today, once negotiations with lenders are complete.
The value of Connaught shares froze at 16.65p yesterday, meaning a drop of over 90 per cent since a surprise profit warning in June.
The company blamed government spending cuts for its dire financial state at the time, though rivals Mears and Rok stressed their social housing and public property businesses remained strong.
Connaught drafted in Deloitte to examine its accounting practices in July, the results of which have not been made public.
The company has around £220m of debt, provided by six banks and four other creditors.
The Connaught administration will be one of KPMG’s largest jobs in several years. The auditor recently dealt with company voluntary arrangements for sports chain JJB and outdoor retailer Blacks.
Support services companies compared:
● Aids the BBC, government and local councils with outsourcing.
● First half pre-tax profit up 15 per cent to £163m.
● Unite union currently balloting workers over strike action.
● Runs the DLR and detention centres.
● First half pr-tax profit up 21 per cent to £101.4m.
● Signed a £415m contract to run a new prison in July.
● Offers social housing repair work.
● Annual results will show "material loss".
● Shares lost more than 90 per cent of their value after profit warning.
● Offers social housing repair work to local councils.
● First half pre-tax profit fell by 50 per cent to £3m.
● Company blamed financial mismanagement for the drop.