Connaught, the major works contractor for Tower Hamlets Homes, who at the moment are carrying out works to properties on the St Vincents Estate in limehouse are looking like they are in serious trouble.
Only a couple of weeks ago, the sub-contractors to Connaught on the St Vincents estates who are installing toilets, went on strike as they had not been paid by Connaught. Connaught themselves who recently have been marred by accusations of financial irregularities are now being investigated by the Financial Services Authority for potential market abuse;
“The company has suspended Peter Jones, the managing director of Connaught Partnerships, the social housing maintenance division, amid an internal investigation.
Mr Jones made £264,953 by selling 68,000 shares on May 21 and 17,839 shares on June 23. Connaught issued its profits warning on June 25.
The Daily Telegraph understands that Connaught held a board meeting on June 23, the day of the second share sale, where the senior executive directors warned of public sector clients deferring social housing spending. Sir Roy Gardner, the chairman, gave management 48 hours to validate the figures, before the findings were issued to the market late in the afternoon on June 25.
Mr Jones was not at the board meeting, but runs the division that the figures related to. He is registered with the City watchdog as a “person discharging managerial responsibility”, which means both the company and the regulator deem him to have in-depth company information and he must seek permission each time he deals in the company’s shares.
FSA rules state directors must disclose any share dealings within four working days, but the dealings were only disclosed to the market on Tuesday. That statement also revealed Mr Jones bought back 7,217 shares on July 16 at a cost of £9,000 .
An FSA probe could leave Mr Jones with a fine or facing criminal proceedings for market abuse. ” – FSA investigates Connaught director’s share sale ahead of profits warning
The company who only a year ago were living a healthy lifestyle, and share were floating at around 300 pence per share have had a disastrous few months, only 2 weeks ago they secured a £15 million loan facility that enabled them to avert further strikes by their sub-contractors. But now as they have warned, they
“probably breached the terms of its loan covenants, which would entitle its banks to seize control.” – Connaught in emergency talks over debt-for-equity swap
On Friday their shares dropped a further 50% to just 15.5 pence a share, as of right now their shares are priced at 12.08 pence
None of this looks good for Connaught, watching the market tickers, it looks as if the share-holders are jumping ship under threat of losing everything. What this means for those living on the St Vincents Estate and anywhere else in the Borough if they collapse who knows.
Tower Hamlets Homes today are holding emergency talks with those living on the St Vincents Estate including members of the Residents Association to inform them of the situation at hand regarding the beleaguered contractor. Residents are extremely concerned at the news, as they have been campaigning years for their homes to be refurbished to the decent homes standard. Some are immediately concerned on wether the works have already been paid for by Tower Hamlets Homes, and that if Connaught collapses what would this mean for the unfinished works?
As this is ongoing at the moment I will endeavour to keep you updated.