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Connaught shares tumble 69 per cent after debt disclosure

Company in dire need of capital after pressuer from suppliers for payments.

Shares of social housing maintenance firm Connaught fell 69 per cent on Tuesday, as chairman Sir Roy Gardner disclosed the company's debt would significantly exceed the forecast of £120m by 31 August.

The company said it stands in breach of its banking covenants and is in urgent need of additional funds. Its debt is expected to be more than £200m.

Connaught's board is reportedly considering a break-up of the business, and the company is known to be in talks with its lenders about extending banking facilities.

It attributed the increase in debt partly to heavy pressure from suppliers, who are demanding advance payments after Connaught's recent troubles.

The company has seen a loss of more than £400m in value after it issued a warning in June that its revenue this year would fall because social housing clients were delaying capital spending.

A fortnight later, Gardner ordered investigations into Connaught's accounting policies. The Financial Services Authority has also been investigating its directors' share dealings and a possible non-disclosure of price-sensitive information.