Bankers have thrown embattled Connaught a lifeline in the form of a short-term £15m overdraft facility.
The cash injection gives the social housing maintenance group a breathing space to negotiate a deal with lenders to secure its future. Connaught warned earlier this week that it was in urgent need of additional funds, in part because suppliers and subcontractors had exerted “additional pressures” on the group since it issued a profit warning last week.
In spite of the cash injection, Connaught remains in a tricky financial situation. It is on course to breach the terms of its loans as it warned earlier this week that net debt would be higher at its financial year end next month than the £120m it had previously advised.
Observers said some form of debt-for-equity swap, disposals, an outright sale, rights issue or involvement of distressed funds were potential options. Shares in Connaught recovered 4.52p, or 14.6%, in the wake of the announcement, to close at 35.53p.
30/07/10 Financial Times 14, 32
Times 40
Daily Telegraph B1
Guardian 26
Independent 36
