10:40am Tuesday 27th July 2010
By Gareth Lewis
SHARES in Connaught, the firm involved in repairing thousands of Southampton properties, plunged more than 80 per cent in one morning, wiping more than £100m off the paper value of the company and leaving it in crisis.
Shares worth £3.20 a piece a month ago and £4.48 late last year, were worth little more than 19p each for a time on Monday morning before rallying to finish at 31p, valuing it at just £44m.
Assurances Southampton City Council said it had received “complete assurances” that work on the remaining 370 properties covered by the £12m, three-year Decent Homes contract would be carried out.
The collapse in the value of the company came after it revealed it was in “urgent” need of funds.
The Exeter-based group has been in turmoil since its warning last month that Government spending cuts could blow a £200m hole in revenues over this year and next.
Already Connaught has repaired 1,300 kitchens and a similar number of bathrooms in council properties across the city under the initiative, which still has until the end of the year to run.
The company last year found itself in the midst of an asbestos scandal after the Daily Echo revealed a leaked memo to the head of Decent Homes which revealed tenants at “over 100” properties may have been exposed to the deadly material.
A council health and safety investigation found Connaught had removed kitchen tiles and other asbestos-containing materials without proper training or safety precaution. The council insisted no tenants were put at risk.
Connaught returned to the headlines after a statement yesterday saying a review had identified an “urgent requirement” for additional funds to meet current and ongoing business, in part due to pressure from suppliers and sub-contractors.
And the company will breach banking covenants after warning that net debt will be significantly in excess of the previously advised level of £120m by the end of August.
Despite the dire financial tidings, a spokesman for Southampton City Council said: “We have had complete assurances from Connaught that the contract with the council will not be affected in any way.”
Sir Roy Gardner, who became chairman in May, said: “These are challenging times for Connaught. We are fortunate that we have been able to attract a number of senior and experienced individuals to support the company at this time.”
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