Connaught shares continue to fall as fears of a debt-for-equity swap build

Marion Dakers
SHARES in embattled housing maintenance firm Connaught tanked again yesterday, as investors reacted to last week’s warning of “material losses” and talk of a debt-for-equity swap.

The stock closed down 29 per cent at 11p, after hitting a low of just 9.2p earlier in the day. The 52-week high for Connaught shares stands at 448.3p.

“I think the market was slow to react on Friday and I was surprised the stock didn’t end lower,” said one analyst.

He added: “When a company, which has lost around £200m in value, is also making serious underlying losses it is very worrying.”

The troubled firm is in talks with creditors including Royal Bank of Scotland over a long-term financing deal, after delivering a spate of profit warnings in recent months.

Insiders believe a debt-for-equity swap is the most likely outcome, which could all but wipe out investors and hand control to lenders.

“A rights issue is out of the question and a swap is all that is left, but it’s hard to know if that will even happen,” said the analyst.

“It could sell its compliance business but with doubts about what shape it is in and the fact Connaught is a distressed seller you don’t know what it will fetch.”