Connaught gains reprieve after overdraft deal with banks

Connaught agreed a short-term overdraft facility and deferral of loan payments with its banks yesterday, giving the cash-strapped social housing provider a reprieve as it reviews trading prospects.

The company warned it was set to breach the terms of its loans earlier this week. Its shares, which have fallen by more than 90 per cent since last month, when it first warned Government austerity cuts would hit its profits, bounced 14 per cent to 35.5p.

Lenders have allowed it to defer payments due on its loans in July and August and the £15m facility is available immediately, Connaught said.

Its chairman Roy Gardner, who has put together a new management team to deal with the crisis, said the new facility was a tangible sign of support from its lenders. The company said it would review its current trading in order to gain a clearer picture of the impact this would have on its full-year performance.