Social housing firm Connaught 'close to collapse'
Tuesday 07 September 2010
Devon-based social housing giant Connaught is on the brink of collapse, it was reported.
The property services group has £220 million of debt and will be put into administration by its bank creditors under UK insolvency procedures, according to the BBC.
The group, which employs 10,000 people, is expected make an announcement later.
Shares in the company have lost about 90% of their value since June when it emerged its contracts would be hit by public sector spending cuts.
Royal Bank of Scotland recently provided £15m to help keep the business going.
But its creditors are thought to have rejected a rescue plan and decided instead to put the group into administration.
The Devon-based company, which was founded in 1982 as a concrete repair specialist, describes itself on its website as a leading integrated services group for the environmental, social housing, public sector and compliance markets.
Sir Roy Gardner, who recently became chairman of the company, has attempted to put together a rescue plan with the help of several new directors.
But the BBC said bank creditors have decided instead to put the business in administration, under UK insolvency procedures.
Until their suspension today, the company's shares had fallen by more than 90% following the warning in June that it had identified 31 projects where spending will be delayed as a result of austerity measures, wiping £80 million off revenues and £13 million from underlying profits in this financial year.
Sales and profits were also expected to fall by a further £120 million and £16 million respectively next year, it added. Connaught debts were estimated to be in region of £220 million.
Founder Mark Tincknell left the company earlier this year on health grounds less than six months into his second spell as chief executive.
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