Administrators brought in as social housing giant gives in to financial deficit
Yesterday WAN reported that UK social housing giant Connaught was on the verge of collapse after months of financial constraints brought on by the British Government’s Emergency Budget. Following last night’s crisis meetings, it has now been confirmed that administration firm KPMG has been brought in to split up what is left of the main company and its subsidiary, Connaught Partnerships Ltd. Other subsidiaries Connaught Compliance, National Britannia Holdings, Fountains Limited and Connaught Environment Limited are thought to be continuing to trade as normal.
Beginning life in 1982 as concrete repair specialist in the seaside Devonshire town of Sidmouth, Connaught has spent the last 28 years establishing itself as an industry favourite and forging over 150 multi-million pound social housing contracts in the UK. Over the years the company scooped many industry prizes, including ‘Top Achiever at the National Constructing Excellence Awards 2008’, ‘Business in the Community Team of the Year for community impact 2008’ and ‘Low Environmental Impact Award 2008 - EIRIS FTSE developed index series’.
However, when the recession struck in 2008, Connaught – which has a total of 10,000 employees – endured a series of financial slashes and the awards seemed to drop away. Now totalling a massive £220m in debt, lenders last night refused the firm vitally needed money causing the difficult decision to bring in KPMG. A statement in June identifying 31 projects where spending would be delayed, taking £80m for revenues and £13m from underlying profits was soon followed by a rather more frantic message 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’.
Industry competitors Morrison and Mears are said to have expressed an interest in picking up Connaught’s now defunct contracts. A statement from Morrison, Chief Executive of the firm comments: “This is clearly a difficult and concerning time for Connaught employees facing an uncertain future, but also for Connaught’s clients who are committed to delivering a range of services to their residents and local communities. Here at Morrison, we want to assure these employees and their clients that we are ready to support wherever possible as maintaining job security in these difficult economic times.” The statement itself reads: “Leading social housing repairs and maintenance provider Morrison stands ready and willing to offer full continuity of employment to those Connaught employees working on social housing repairs contracts, following the announcement of the administration of Connaught Partnerships.”