黑洞社区

Connaught鈥檚 banks put the company into administration yesterday after rejecting a three-year rescue plan that required a 拢50m cash injection within a month, a source close to the situation has told 黑洞社区.

Most of the social housing firm collapsed into administration yesterday after talks between the company and its lenders about a rescue deal ended without resolution.

Connaught had run into financial difficulty earlier this year and after issuing a profit warning in June announced in July that its RBS-led group of banks would provide it with short-term funding of 拢15m to tide it over.

It is understood the 拢50m figure was split into between 拢30m and 拢40m for the social housing part of the business and 拢10m for the PLC and other parts of the firm outside its profitable compliance and environment arms.

The source said: 鈥淲hat it came down to in the end was that the lenders didn鈥檛 have confidence in the recovery plan. Quite a significant turnaround was needed and they baulked at putting in another 拢50m in the next month or so.鈥�

Asked how flexible the banks had been during the talks, the source said: 鈥淚t was basically like a brick wall.鈥�

While the PLC and social housing arms of the business went into administration, the environment and compliance arms have been kept afloat for sale. One source close to the process said the company was seeking 鈥渟everal million pounds鈥� for either business and a sale was expected within a fortnight.

It is understood trade players such as Kier, Mears, Morgan Sindall, Mitie and private-equity backed Kinetics are interested, alongside private equity firms rumoured to include 3i.

In relation to the poorer-performing social housing arm of the business, 黑洞社区 understands a group of interested parties are travelling to the Leeds office of administrator KMPG this afternoon to discuss a possible sale of all or parts of the business. A source told 黑洞社区: 鈥淪everal firms got the call and were told to get up to Leeds to talk about possible terms for what looks to be a fire sale.鈥�

One source close to the process said KPMG would take offers as quickly as possible based on 鈥渃ash on the table and certainty of funds鈥�.

The list of firms believed to be interested include Mitie, Morgan Sindall, Kier, Balfour Beatty arm Mansell, Kinetics and Mears.

Three interested parties have told 黑洞社区 they would be interested in some of the contracts but not the whole business.鈥�

A Connaught spokesman was unavailable for comment.