Travelex owner Finablr planning for ‘potential insolvency’
Finablr, the owner of foreign exchange firm Travelex, has appointed advisers to prepare for a possible insolvency after the FTSE 250 company became mired in an accounting scandal.
In an update to the stock exchange this morning, Finablr’s board said it had engaged an accounting firm “to undertake rapid contingency planning for a potential insolvency appointment”.
Finablr yesterday warned it was in danger of collapse, with trading in its shares suspended as the group said it had discovered around $100m of undisclosed financing and no longer had any certainty over its financial position.
The company remains in talks with its banks over its financial position, and risks running out of cash if it does not reach an agreement with them, according to the Financial Times.
The Financial Conduct Authority (FCA) is also in discussions with the company about its financial issues, the paper reported.
The announcement comes after a torrid day for the company yesterday, in which it revealed the discovery of $100m of cheques made by group companies that had been kept secret before its initial public offering last year.
Finablr said the discovery had raised doubts over its ability to continue as a going concern, and appointed Kroll to carry out an independent investigation into its finances.
The company’s chief executive, Promoth Manghat, resigned yesterday as the FCA agreed to freeze trading in its shares, which fell almost ten per cent in morning trading before being suspended.
The disclosure echoes the discovery of off-balance sheet financing at sister firm NMC Health, which, like Finablr, was founded by UAE-based billionaire BR Shetty.
NMC Health shares were suspended last month after evidence of potential fraud that cast doubt over its finances was uncovered.
Shares in the Middle Eastern hospital operator had collapsed after it fell victim to a short attack in December.
Travelex is the world’s largest retail currency dealer, with over 1,000 branches worldwide. Banks and retailers including RBS, Lloyds and Tesco outsource their foreign exchange services to the company.