Spending cuts blamed for Connaught's collapse

As the social housing firm struggles to stay afloat amid speculation it could be placed into administration today, fears grow for the fate of its 10,000 workforce and contracts with other firms

Social housing firm Connaught looked to be on the brink of collapse today after lenders refused to offer additional support to the stricken company.

The Exeter-based repair and maintenance specialist has been in turmoil since its June warning that government spending cuts could blow a £200m hole in revenues over this year and next.

Amid speculation that it could be placed into administration as early as today, Connaught requested the suspension of trading in its shares and said a solution to its funding issues was "increasingly uncertain".

It is in discussions with other parties but added that its lenders were unlikely to provide additional funds.

The firm, which employs 10,000 people and has around 180 multimillion-pound social housing contracts in the UK, has been in talks with its lenders after a review identified an "urgent requirement" for additional funds to meet current and ongoing business, in part due to pressure from suppliers and contractors.

Politicians and union leaders expressed concerns for the hundreds of South Wales workers employed by the firm. It maintains council houses and housing association stock, and has a Caerphilly division where it acquired health and safety compliance firm National Britannia around three years ago.

Connaught also has a training division in Caerphilly, where people can gain qualifications through apprenticeship schemes.

Caerphilly MP Wayne David said he was concerned for workers employed by the firm.

"Connaught is a quality provider of training and has a good reputation and I would be sorry for both people it provides skills training to and people it employs as well," he said.

Royal Bank of Scotland recently provided Connaught with a further £15m in an attempt to keep the group going, the BBC said today.

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 £80m off revenues and £13m from underlying profits in this financial year.

Sales and profits were also expected to fall by a further £120m and £16m respectively next year, it added. Connaught's debts were estimated to be in region of £220m.

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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