More than 3,000 jobs at Connaught have been saved after the sale of the collapsed support services group’s environmental business.
The disposal of the company, which trims trees alongside railway lines as well as other landscaping and forestry services, was completed yesterday. A consortium, led by Royal Bank of Scotland and the private equity company Alchemy Partners, and which included Connaught lenders, agreed to take over the division.
The newly independent company had already readopted its former name of Fountains, which had been listed on AIM until it was taken over in 2009. It wanted to disassociate itself from Connaught, which went into administration last September.
The profitable business was ringfenced by the administrator KPMG at the time of the collapse and was run as a going concern.
The Banbury-based company employs 2,700 staff. Richard Haddon, chief executive of Fountains, said that the group had not laid off any workers, despite the uncertainty in recent months.
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In a staff memo, seen by The Times, Mr Haddon said: “I am delighted to inform you that at 12.30 this morning we concluded the formal process of transferring Fountains to an independent company. We no longer have any association with Connaught.”
He told The Times that the company would concentrate on winning new customers, after cutting its ties to Connaught and proving that it is financially secure. It has reached agreement on a new working capital facility and will have no long-term debt after the sale.
Last year Morgan Sindall acquired the bulk of Connaught’s social housing repairs operations, which saved about 2,500 jobs. A further 1,000 jobs were saved last September when Mears, a rival support services group, took over contracts from Connaught.
Final straw
• Connaught’s demise was triggered last June when it said profits would be hit by local authority spending cuts
• It said it would lose money on existing contracts and that it was in desperate need of funding as nervous suppliers demanded earlier payment
• It fell into administration in September and since then 1,400 jobs have been lost