Connaught Group on the verge of collapse

Connaught Group, the stock market listed social housing company, has today suspended its shares amid concerns that the company's bankers are willing to come forth with any more funding to support the company in the short to medium term. It is believed that government spending cuts had blown a £200 million hole in the company's revenue forecast for the future, something which saw the shares fall over £3 to just 16p upon suspension.

There's no doubt that the repair and maintenance specialist was forced to rip up future profit forecasts due to government austerity measures in the short to medium term. This is a company which many had put forward as one of the leaders in the sector and one which had certainly ridden the wave of social housing expansion over the last decade. However, while administration has not yet been announced for the company there is intense speculation that it could happen as quickly as today even though the company is in talks with other parties.

Quite how this will impact upon other public-sector related companies remains to be seen because many banks in the UK will now be looking over their shoulders and a little more concerned about the levels of funding which have been made available to public-sector related companies in the UK.