Insider deal investigation at scandal-hit aviation firm

TROUBLED Cobham is being investigated by regulators over its handling of inside information before it issued a profit warning and a £500m emergency cash call.

Shares in the defence firm slumped almost 20pc when it announced last April a 70pc plunge in first-quarter profit and warned it could come close to breaching debt agreements.

Yesterday Cobham said officials from the Financial Conduct Authority had told the firm they were referring it to the City regulator’s enforcement arm for investigation.

The FCA has not specified what it are probing. Analysts speculated one possibility was that Cobham could have updated the market sooner about its financial position.

In early March 2016, less than two months before the rights issue, Cobham reported a robust performance during 2015 and said it was expecting stable trading in defence and security markets. Sandy Morris, analyst at Jefferies, suggested the FCA might be questioning whether Cobham bosses knew about their problems days before they informed the market.

It is believed the FCA’s investigation was not triggered by Cobham. It could have been prompted by the FCA’s routine analysis, or after questioning by shareholders. No directors were reported to have sold shares in the run-up to the rights issue in March.

The investigation comes at a torrid time for Cobham. Last year, chief executive Bob Murphy, chief financial officer Simon Nicholls and chairman John Devaney stepped down following a string of profit warnings.

Earlier this month chief executive David Lockwood announced a second rights issue of £500m and reported a 30pc slide in profits. That followed a fifth profit warning in February.

Cobham’s revenues plunged 7.7pc during 2016, from £2bn to £1.9bn, while profits fell from £332m to £225m.

A Cobham spokesman said: ‘The company is cooperating fully with the FCA and will update the market on the outcome in due course.’