January 24, 2020 / 12:26 PM / 25 days ago

Finablr stock dives on debt deal in fresh blow to billionaire owner

LONDON (Reuters) - Shares in payments company Finablr (FINF.L) plunged 27% on Friday after it disclosed its majority owner, UAE-based Indian billionaire B. R. Shetty, had pledged over half the company’s stock as security against debts it incurred buying Travelex.

In response to the share price drop, Finablr in a statement said it had sought clarifications from BRS, an investment vehicle owned by Shetty, which had reassured it about the level of security represented by its holding in Finablr and the talks it has had with its banking group about repayment or refinancing of the debt.

Finablr declined to immediately give further details when contacted by Reuters.

Another of Shetty’s London-listed firms, United Arab Emirates’ largest private healthcare provider NMC Health (NMC.L) has halved in value after being hit in December by U.S. short-selling firm Muddy Waters.

Shetty’s Finablr in 2015 bought British travel money firm Travelex, which this month suffered a cyber attack that forced its systems offline for weeks and caused chaos for holidaymakers.

In its statement, published after markets closed on Friday, Finablr said the cyber incident at Travelex was being resolved and would not impact 2019’s results, nor was it expected to have a material impact on the company’s performance in the current year.

More than 300 million pounds was wiped off Finablr’s market capitalisation on Friday, reducing it to 665 million pounds.

“The outlook for Finablr is poor. The fact the founder used roughly half of the company’s shares as collateral for a loan suggests the situation is serious,” said CMC Markets analyst David Madden.

“The Travelex crisis has clearly hit the founder hard and it suggests that he is scrambling around to get financing. Even if the funding issue is sorted out, Finablr’s share price will probably struggle to recover – like NMC Health.”

Shetty did not immediately respond to requests for comment.

The Travelex hack left the majority of British high street banks, which use the company to provide travel money to customers, unable to take online orders.

Finablr floated on the London Stock Exchange in May last year and since then it has fallen nearly 44% in value.

(GRAPHIC: Finablr - here)

Reporting by Lawrence White and Iain Withers in London and Muvija M in Bengaluru; editing by Rachel Armstrong, Elaine Hardcastle, Kirsten Donovan

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