The woes of debt-laden integrated services group Connaught continue.

More than £400m have been wiped off the value of Connaught after it warned on 25 June that public spending cuts would see its revenues fall by £80m this year.

Lloyds Banking Group a junior member of a lending syndicate led by Royal Bank of Scotland, confirmed on Wednesday night that it would not start selling off loans. A debt-for-equity swap with the banks remains a possibility.

Investor confidence in the firm suffered after Barclays sold its entire debt exposure of £19m ($29.7m) for about 37% of face value.

Breeden European Partners, Parvus Asset Management and Norges Bank, which manages the Norwegian Government Pension Fund Global, have sold down their stakes. Toscafund, which has built a stake over the past month, is also believed to have reduced its holding.

Deloitte is investigating Connaught's accounting policies while a new management team has been set up to lead an attempted turnaround. The firm’s CEO, Mark Tincknell, and its finance director, Stephen Hill, left the business in early July.