Announcement of ’material loss’ sparks 46% drop in share price
Connaught, the troubled social housing specialist, could fall into the hands of lenders following its announcement on Friday that it would record a “material loss” for the financial year, which knocked 46% off its share price.
This morning its shares were trading at 12p as a further 21% was wiped off its value in early trading.
The firm’s chairman, Sir Roy Gardner is now considering a radical restructure which could see a debt-for-equity swap that would hand control of the company to its lenders.
In a statement on Friday, Connaught said it would “record a material loss” for the current financial year. In addition, the company also anticipates making provision for future losses on current contracts. It also anticipates writing-down the value of its assets.
Chairman, Sir Roy Gardner said: “We face challenges in turning this group around, but I remain both confident that this can be achieved and committed to seeing the process through. “My focus, and that of the new executive team, will be to continue the plans for the refinancing of the company for the benefit of all our stakeholders who have shown loyalty to Connaught over the years. The business remains committed to delivering excellent quality and service for our clients”.
Connaught has seen its share price plunge from 320p in early June and is also reportedly under investigation by the Financial Services Authority.