Connaught suspends share trading

Troubled repairs and maintenance contractor Connaught has suspended trading of its shares in the London Stock Exchange while it seeks “clarification” of its financial position, prompting speculation that it is on the verge of going into administration.

The Financial Services Authority (FSA) has temporarily suspended the securities for Connaught effective from 7.30am today, at its own request.

In July, the company had warned that it was set to breach its banking covenants, but towards the end of the month it managed to negotiate a breathing space with its lenders when it negotiated a short-term overdraft facility. The problems of the last few months have seen its share values plummet to 16.65p prior to their suspension.

Following the FSA temporary suspension of trading in its shares, Connaught released the following statement, with further announcement expected to follow in due course:

“On 29 July 2010, Connaught announced that it had agreed the terms of a short-term overdraft facility. Since that date Connaught has had continuing discussions with its lenders and other sources of finance with the objective of securing additional funding and 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.

“Accordingly, pending clarification of the company’s financial position, Connaught has requested a suspension of the trading of its shares on the London Stock Exchange with immediate effect.”

Connaught was established in 1982 and has grown into a national provider of repairs, maintenance and other facilities management services to social landlords, employing 10,000 people.