Bankers refuse to bail out Connaught

Social housing group Connaught has pulled its shares from the Stock Exchange amid reports the company is on the brink of administration.

It follows an announcement in July that the company’s banks had agreed a short term £15m facility to tide it over after it ran into financial difficulties.

In a statement to the market this morning, the company said: “Since that date 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 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.”

The BBC has reported that the company’s creditors have decided to put it into administration.

Other options on the table had been a debt for equity swap with its lenders or a sell-off of parts of the business.

The company has blamed government cuts for some of its financial difficulties. At the same time analysts have raised questions about its accounting practices that meant upfront mobilization costs on contracts were spread over the lifetime of the contract rather than at the beginning.

Several social housing firms are known to be circling the company in the hope of picking up contracts or parts of the business.