March 12, 2020 / 8:44 AM / 16 days ago

Payments group Finablr slides 56% on news of financial investigation

(Reuters) - Shares in Travelex owner Finablr (FINF.L) plunged by 56% on Thursday after it launched an internal investigation into its financial situation and said it will take steps to address a liquidity squeeze.

A Finablr spokesman declined to elaborate on the exact nature of what the company described as “an independent investigation” into its “financial arrangements” and which comes after its Travelex business was hit by a damaging ransomware attack and as it contends with disruption from the coronavirus pandemic.

NMC Health (NMC.L), which shares the same founder, issued a short statement an hour later saying that a review by external advisers had shown evidence pointing to suspected fraud related to some of its previous financial activities.

The financial difficulties of founder BR Shetty appear to be spreading to other companies of his portfolio and London-listed Finablr said it was taking urgent steps to assess its current liquidity and cashflow situation.

“These factors place liquidity the company needs to manage its business effectively and its ability to negotiate longer-term financing,” Finablr said.

Finablr’s shares, which have crashed by 94% since December, were down 56% at a record low of 9.99 pence by 1023 GMT.

BR Shetty, who owns 63% of Finablr and was ousted as co-chairman of NMC in February, has pledged more than half of Finablr’s stock as security against debts it incurred buying Travelex. Last month it was revealed that he has also pledged 7 million NMC shares as security for debt.

NMC has also been the target of criticism from U.S. shortseller Muddy Waters since late last year.

Shares in NMC were left with a value of 938 pence when they were suspended in late February, a far cry from the 2,631 pence they traded at before Muddy Waters raised questions over the company’s financial statements.

Finablr also warned on Thursday that travel restrictions to prevent the spread of coronavirus is hurting demand for its foreign exchange and payment services.

The company, which also owns money transfer business UAE Exchange, said the outbreak has restricted the flow of hard cash that the company needs to operate its businesses.

Reporting by Muvija M in Bengaluru and Saeed Azhar in Dubai; Editing by Bernard Orr and David Goodman

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