Connaught, the property services group that specialises in social housing, is on the brink of going into administration, the BBC has learned. An announcement is expected later, BBC business editor Robert Peston said. Connaught, which employs 10,000 people, has £220m of debt, provided by six banks and a quartet of other creditors.
Connaught ran into serious difficulties over the past couple of months, after it emerged that a series of contracts would be loss making. The lead bank is Royal Bank of Scotland, which recently provided Connaught with a further £15m in an attempt to keep the group going. The management, under a new chairman, Sir Roy Gardner, the chairman of catering giant Compass, has tried to put together a rescue plan. However, its bank creditors have decided instead to put the business in administration, under UK insolvency procedures.
In his blog, Robert Peston writes: "In spite of the severity of the economic crisis that engulfed the UK in 2008, few listed businesses have collapsed.In that sense Connaught, a FTSE 250 company which at one stage had a market value of well over £500m, is unusual." Shares in the Exeter-based company have lost about 90% of their value since late June, when it announced it had identified 31 contracts that had been deferred following the spending cuts announced in the Budget.
