Social housing group Connaught calls in KPMG as administrators
Wednesday 08 September 2010
Connaught was in the process of appointing administrators last night after the indebted social housing group admitted to investors that it was unlikely to find the money to repay its creditors.
The social housing group, which employs 10,000 people, has been under pressure since June when it identified 31 projects that have been deferred as a result of the Government's austerity measures.
Last night, Connaught confirmed it was appointing KPMG as administrators for Connaught plc and its social housing subsidiary, Connaught Partnerships. Its other main subsidiaries, which make up its compliance and environmental divisions, are continuing to trade normally and an announcement detailing an agreement with funders is expected today. An attempt to sell these divisions is now expected.
The company, which has a debt pile of £220m, suspended trading in its shares yesterday morning as it warned investors that its attempts to secure new finance had failed. In a statement to the Stock Exchange, Connaught said: "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." Rivals have moved quickly to snap up contracts that Connaught faces losing. Bob Holt, the chairman of Mears, said that he had been looking at some of Connaught's contracts for a number of weeks.
"I haven't a clue and wouldn't like to comment on Connaught's situation, but we would like to be seen as preferred home for some of its contracts if they are unable to fulfil them," he said.
Connaught shares lost more than 90 per cent of their value between June, when it said that the Government's plans would wipe £80m off revenues and £13m from underlying profits in this financial year, and yesterday's suspension.
Its founder and chief executive, Mark Tincknell, stepped aside on health grounds in July and the company asked its chairman, the former Centrica chief executive and Manchester United chairman Sir Roy Gardner, to put together a rescue plan with several new directors.
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