RTRS - QUINDELL PLC QPP.L IS POISED TO ANNOUNCE ON TUESDAY, NOV 18 THAT CHAIRMAN ROB TERRY WILL LEAVE T.HE BOARD IMMEDIATELY
Gotham Casts a Long Shadow Over Quindell
2014-11-17 20:36:29.216 GMT
Ben Martin
Nov. 17 (Telegraph) -- Quindell's share price has never
recovered since the attack by the US short-seller
Gotham City Research, the American short-seller named after
Batman’s home city, may be a villain in the eyes of Rob Terry,
the founder of Quindell.
But in the light of this month’s events, the US firm, which
published scathing allegations about the insurance claims group,
may well be viewed as a hero by those investors who followed its
advice seven months ago and sold shares in the Aim-listed
company.
Quindell stock has plunged 90.5pc since April, when Gotham
launched its attack on the Hampshire-based company. The High
Court later ruled in Quindell’s favourin a libel case against
Gotham after the US firm failed to provide a defence. The shares
slumped 19pc alone on Monday after Quindell revealed Canaccord
Genuity had resigned as its joint broker.
Given that Canaccord handed in its notice on October 21,
news of the resignation shocked investors, as it suggested Mr
Terry knew of Canaccord’s exit when he controversially sold
shares to raise money earlier this month. The resignation of
Canaccord is the latest in a string of setbacks that have knocked
Quindell’s share price in November.
Last Monday, Quindell was forced to correct an earlier
statement that suggested Mr Terry and two other directors had
taken out a loan, secured on their Quindell stakes, with US firm
Equities First Holdings to raise funds to purchase Quindell
shares. Rather than a loan, the three directors had actually
entered into a sale and repurchase agreement, meaning that the
trio had effectively sold shares to EFH and promised to buy them
back in two years time, Quindell admitted.
The share price plunged, a fall exacerbated by news on
Thursday thatFidelity had almost halved its stake in the company.
The collapse in the stock has prompted calls for an investigation
into Quindell, once a darling of Aim. “No one should be putting
money into this stock until there has been a full review,” said
Lorne Daniel, an analyst at finnCap. “I think it needs the
regulators to step in at this stage.”
It was only in February that enthusiastic investors had sent
Quindell shares to a record high of 660p. On Monday, the stock
closed at 55½p, its worst level since December 2011, which was a
pivotal year for Quindell.
In May 2011, Mr Terry reversed Quindell, which had started
life as a Hampshire golf and country club, into an Aim-listed
shell called Mission Capital. At the time of the Mission deal,
Quindell had already been transformed into a diversified
outsourcing company that described itself as having “expertise in
technology, telecoms, utilities, leisure and retail, which the
directors believe has significant potential for growth”.
And grow it did, predominantly through a spate of
acquisitions that involved Quindell either buying whole companies
or stakes in firms. By this February, Quindell’s market value had
swelled to more than £2bn and the group had become a sprawling
range of businesses, including telematics — the black boxes
insurers use to track drivers’ habits — and pursuing industrial
hearing loss cases.
But some institutional investors were worried about
Quindell’s cash generation. They were also wary of its rapid
growth, says one fund manager who did not invest in Quindell.
The prolific issuance of shares to fund deals would have put
off some investors due to the complex nature of the acquisitions
and the time fund managers needed to spend “understanding what’s
going on underneath the bonnet”, he said.
Many private investors, however, were undeterred. A steady
stream of stock exchange filings announcing contract wins and
acquisitions only served to stoke demand for the shares.
That all came to a juddering halt in April, when
short-seller Gotham published its 74-page dossier on Quindell
that wiped more than £900m off the company’s market cap in a
single day.
The shares have never recovered. In June, the stock was
knocked a further 20pc after Quindell disclosed that its
long-awaited move to a premium listing of the stock exchange had
been blocked by regulators because of its significant growth in
the preceding thee years. In a further blow, the RAC pulled out
of its telematics joint venture in September.
The agreement between EFH and Mr Terry, which has caused the
latest share price fall, is likely to continue to cast a shadow
over Quindell.
Under the arrangement, margin calls are triggeredif the
three-day moving average of Quindell’s shares is at 70p or below.
To satisfy the calls, Mr Terry and the two other directors either
have to provide cash or transfer more shares to EFH. If the slump
continues, the hordes of private investors who offloaded shares
on Monday will not be the only ones selling. Mr Terry could be
forced into reducing his remaining stake, too.
-0- Nov/17/2014 20:36 GMT
2014-11-17 20:36:29.216 GMT
Ben Martin
Nov. 17 (Telegraph) -- Quindell's share price has never
recovered since the attack by the US short-seller
Gotham City Research, the American short-seller named after
Batman’s home city, may be a villain in the eyes of Rob Terry,
the founder of Quindell.
But in the light of this month’s events, the US firm, which
published scathing allegations about the insurance claims group,
may well be viewed as a hero by those investors who followed its
advice seven months ago and sold shares in the Aim-listed
company.
Quindell stock has plunged 90.5pc since April, when Gotham
launched its attack on the Hampshire-based company. The High
Court later ruled in Quindell’s favourin a libel case against
Gotham after the US firm failed to provide a defence. The shares
slumped 19pc alone on Monday after Quindell revealed Canaccord
Genuity had resigned as its joint broker.
Given that Canaccord handed in its notice on October 21,
news of the resignation shocked investors, as it suggested Mr
Terry knew of Canaccord’s exit when he controversially sold
shares to raise money earlier this month. The resignation of
Canaccord is the latest in a string of setbacks that have knocked
Quindell’s share price in November.
Last Monday, Quindell was forced to correct an earlier
statement that suggested Mr Terry and two other directors had
taken out a loan, secured on their Quindell stakes, with US firm
Equities First Holdings to raise funds to purchase Quindell
shares. Rather than a loan, the three directors had actually
entered into a sale and repurchase agreement, meaning that the
trio had effectively sold shares to EFH and promised to buy them
back in two years time, Quindell admitted.
The share price plunged, a fall exacerbated by news on
Thursday thatFidelity had almost halved its stake in the company.
The collapse in the stock has prompted calls for an investigation
into Quindell, once a darling of Aim. “No one should be putting
money into this stock until there has been a full review,” said
Lorne Daniel, an analyst at finnCap. “I think it needs the
regulators to step in at this stage.”
It was only in February that enthusiastic investors had sent
Quindell shares to a record high of 660p. On Monday, the stock
closed at 55½p, its worst level since December 2011, which was a
pivotal year for Quindell.
In May 2011, Mr Terry reversed Quindell, which had started
life as a Hampshire golf and country club, into an Aim-listed
shell called Mission Capital. At the time of the Mission deal,
Quindell had already been transformed into a diversified
outsourcing company that described itself as having “expertise in
technology, telecoms, utilities, leisure and retail, which the
directors believe has significant potential for growth”.
And grow it did, predominantly through a spate of
acquisitions that involved Quindell either buying whole companies
or stakes in firms. By this February, Quindell’s market value had
swelled to more than £2bn and the group had become a sprawling
range of businesses, including telematics — the black boxes
insurers use to track drivers’ habits — and pursuing industrial
hearing loss cases.
But some institutional investors were worried about
Quindell’s cash generation. They were also wary of its rapid
growth, says one fund manager who did not invest in Quindell.
The prolific issuance of shares to fund deals would have put
off some investors due to the complex nature of the acquisitions
and the time fund managers needed to spend “understanding what’s
going on underneath the bonnet”, he said.
Many private investors, however, were undeterred. A steady
stream of stock exchange filings announcing contract wins and
acquisitions only served to stoke demand for the shares.
That all came to a juddering halt in April, when
short-seller Gotham published its 74-page dossier on Quindell
that wiped more than £900m off the company’s market cap in a
single day.
The shares have never recovered. In June, the stock was
knocked a further 20pc after Quindell disclosed that its
long-awaited move to a premium listing of the stock exchange had
been blocked by regulators because of its significant growth in
the preceding thee years. In a further blow, the RAC pulled out
of its telematics joint venture in September.
The agreement between EFH and Mr Terry, which has caused the
latest share price fall, is likely to continue to cast a shadow
over Quindell.
Under the arrangement, margin calls are triggeredif the
three-day moving average of Quindell’s shares is at 70p or below.
To satisfy the calls, Mr Terry and the two other directors either
have to provide cash or transfer more shares to EFH. If the slump
continues, the hordes of private investors who offloaded shares
on Monday will not be the only ones selling. Mr Terry could be
forced into reducing his remaining stake, too.
-0- Nov/17/2014 20:36 GMT