THE Financial Services Authority has launched a probe into house maintenance firm Connaught.
The City watchdog is investigating whether Connaught fully disclosed its dire financial condition to investors ahead of last month’s shock profits warning.
The FSA’s move comes as Connaught lost almost 70 per cent of its share value yesterday as it admitted it will breach its banking covenants by the end of August.
The FTSE 250-listed firm revealed its debt is “significantly in excess” of the £120m originally posted, and said it is in urgent talks with unnamed lenders to secure additional funding above the £200.6m already borrowed.
Company bosses met with shareholders, analysts and employees yesterday to convince them that the firm has a future. The shares had already shed two-thirds of their value after a profit warning in June, when the firm blamed lost trade on public spending cuts.
City stalwart Sir Roy Gardner, who was appointed chairman in May, yesterday drafted in four City veterans to help change the firm’s fortunes, including Stephen Billingham, formerly of British Energy and WS Akins, who will work on funding.
Roger Wood of British Gas, Michael Young of Centrica and Compass and former Capita executive Chris Sellers have also been taken on. An unnamed Big Four auditor is still examining the firm’s accounting policy, after Sir Roy initiated an independent review two weeks ago.
Sir Roy said yesterday the situation was “challenging”.
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Shares closed yesterday at 31.7p, almost 70 per cent down on the day and 93 per cent down on the 52-week high of 448p seen in October.
The social housing maintenance firm started trading in 1982 as a concrete repair company.