Fresh fears for stricken owner of Travelex
TrAVeLex’S owner is on the brink of collapse after bosses discovered £81m worth of secret cheques.
Finablr, which floated the foreign exchange firm last year, said the cheques – uncovered in an internal review – had been written ‘for the benefit of third parties’ without the knowledge of its board.
The findings have left the payment firm ‘unable’ to assess its own finances at a time when it is being hammered by the coronavirus crisis.
It prompted bosses to request a shares suspension yesterday as they scrambled to stabilise the business.
But Finablr admitted there was ‘material uncertainty’ about its survival and abruptly revealed that chief executive Promoth Manghat had quit, with no successor named.
It is another blow for Br Shetty, the Indian billionaire who founded Finablr. His other London-listed business, nMC Health, is also engulfed in a crisis following the discovery of £2bn in debts that its board was previously unaware of. The private hospitals firm said it was investigating alleged fraud on Friday.
That came after short-seller Muddy waters published a devastating report in december claiming nMC’s balance sheet could not be trusted, sending shares into freefall.
Finablr’s shares have also lost more than 90pc of their value since then. They fell another 9.9pc yesterday.
Shetty resigned from nMC’s board in February but he remains joint chairman of Finablr. However, uncertainty about the 77-year-old tycoon’s exact stake in both nMC and Finbalr has added to the crisis consuming both companies.
He was forced to admit that complicated financing arrangements with other top investors had left the exact size of his holdings unclear, with his lawyers yet to provide an answer. Finablr owns Abu dhabi’s UAe exchange and bought Travelex in 2014, before listing it on the London Stock exchange last year.
It previously warned that the crisis at nMC had put stress on its finances, along with the effects of coronavirus on the travel industry and a credit downgrade of Travelex’s bonds.
Yesterday it said that since its earlier warning, ‘these constraints have become amplified and have now reached a point where they are having a material adverse impact on the company’s operations, including resulting in the company no longer being able to provide certain payment processing services’.
The UAe exchange said yesterday that it was no longer accepting new transactions ‘due to certain operational challenges’. But Travelex was still trading through its website.
A Travelex spokesman said: ‘while Finablr has warned that it can no longer provide certain payment processing services, this does not apply to Travelex. Travelex remains open for business.’