Connaught’s bankers have given the firm a stay of execution, after agreeing to a £15 million short term addition to its existing £200.6m overdraft.
The firm can also defer payment of interest and principal on its existing overdraft for July and August.
Following agreement with its bankers, Connaught will continue trading as normal, without having to pay off its overdraft in July and August.
In an update to the stock exchange, the firm said: “The company is pleased to announce that it has now agreed with its lenders the terms of an additional £15 million, short term overdraft facility, together with deferral of interest and principal payments due on its existing facilities in July and August.
“The overdraft facility is available immediately. This facility will be in addition to its current facilities of £200.6m.”
It is still in negotiations to refinance its debt and seek a long term solution to its current financial problems.
The firm is also reviewing its current trading and the implications this may have on its full year performance. This essentially means that it is reviewing its profitability and will update the market in future with exactly how hard it has been hit by supplier pressures and the contract deferrals, which lead to its first profit warning in June.
Connaught chairman Sir Roy Gardner said: “We are delighted by this tangible evidence of support from our lenders. We will now seek to put in place arrangements which will leave Connaught on a more secure footing for the longer term.”