FEARS were mounting for the future of Exeter-based social housing firm Connaught amid speculation that it could collapse with the loss of hundreds of jobs in Devon.

Around 360 people are employed directly by the company in Devon, mainly in Exeter, and at least 150 more depend on the support services company for employment.

The company, reported to be on the verge of going into administration, has its headquarters at Exeter Business Park and its offices on Pynes Hill.

While sources close to the firm suggested management had not given up hope of a rescue package, business leaders warned if the firm ceased trading the impact would be felt by many small firms further down the supply chain.

Connaught requested the suspension of trading in its shares yesterday morning 'pending clarification of the company's financial position' after lenders refused to offer additional support to the stricken company.

The repair and maintenance specialist has been in turmoil since it warned in June that Government spending cuts could blow a £200million hole in revenues this year and next.

It agreed a short-term overdraft facility at the end of July but said yesterday a solution to its funding issues was 'increasingly uncertain' and that its lenders were unlikely to provide additional funds.

The firm, which employs 10,000 people nationwide and has around 180 multi-million-pound social housing contracts in the UK, has been in talks with its lenders after a review identified an urgent requirement for additional funds to meet current and ongoing business.

New chairman Sir Roy Gardner has attempted to put together a rescue plan with the help of several new directors.

Before shares were suspended yesterday their price had fallen by more than 90 per cent since Connaught warned in June that it had identified 31 projects where spending would be delayed as a result of austerity measures, wiping £80million off revenues and £13million from underlying profits in this financial year.

Business leaders said it would be a major blow to the local economy if Connaught went into administration, resulting in substantial redundancies.

Tim Jones, chairman of Devon and Cornwall Business Council, said: "I'd be amazed if there are fewer than 500 dependent jobs in Devon at stake. It doesn't get much bigger than that if we lose that number of jobs in one go from a key sector in our economy."

Exeter Chamber of Commerce chairman Derek Phillips said: "I think some of the business will definitely be sold off, as there must be some profitable parts, but that usually takes time and it depends how many contracts they have now.

"There are some very large building contracts in the area, like Exeter University, which hopefully will create some jobs for those on the building side likely to be made redundant, and Exeter still has very low unemployment levels, so hopefully there will be opportunities out there for people affected."

The company's HQ in Grenadier Road was the centre of media attention yesterday. Security guards told journalists the firm was trading as normal and nobody would be speaking to the press. Connaught said a further announcement would be made in due course.