Social Housing Group Going into Admin

Connaught, the services provider that specialised in social housing, is on the brink of administration this morning after the group’s shares were suspended.

Social housing group Connaught is on the brink of administration this morning after the group’s shares have been suspended.

The company, which employs 10,000 people, said it was unlikely to secure the funding needed to carry on trading. The group is expected to appoint KPMG, which has been providing restructuring advice to the lenders, as administrator.

The services provider issued a profit warning in June when it said 31 contracts to repair council had been deferred following the spending cuts announced in the Budget.

A month later Connaught said it was set to breach its banking covenants and had agreed a short term overdraft to buy it some time to repair its books. Royal Bank of Scotland recently provided Connaught with a further £15m in an attempt to keep the group going.

Connaught has £220m of debt, provided by six banks and a quartet of other creditors.

Connaught’s shares have crashed from 320p at the end of June to just 16½p at the close of trading on Monday.

In a statement to the London Stock Exchange the firm said, "Connaught has had continuing discussions with its lenders and other sources of finance with the objective of securing additional funding and a restructuring of the group's financing for the longer term," the company said in a statement to the London Stock Exchange.

"The group now believes that the availability of additional funds from its lenders will not be forthcoming and, whilst it remains in discussions with other parties, the ability to provide an adequate solution to the funding issues the group faces has become increasingly uncertain."

Posted at 03:21PM Sep 07, 2010 by Marc Stenton in Insolvency  |  Comments[0]