As the global battle against Covid-19 moves into uncharted territory, the avalanche witnessed across global stock markets may have claimed its first victim. Finablr, the owner of Travelex, has asked advisers to prepare for a possible insolvency, paving the way for the end of a company worth more than £1 billion only last year.
The company has more than 25 million retail customers across subsidiaries such as Travelex and UAE Exchange, providing foreign exchange services in airports and high streets around the world. More than 1,500 corporate and institutional groups also use its services and it handled $115 billion of transactions last year.
Finablr says its board has engaged an accounting firm “to undertake rapid contingency planning for a potential insolvency appointment” with a view to maximising value in the group. The appointment has not yet been finalised. The company remains in talks with its lending banks about its financial position. Without an agreement with its banks, it is at risk of running out of cash, according to a person familiar with the matter.
The FCA has also been talking to the company about the issues, the person said. The announcement comes a day after the group said it had discovered $100 million of cheques kept secret from its board that had been made by group companies before its IPO in 2019, causing doubts over its ability to continue as a going concern. It appointed Kroll to carry out an independent investigation.
The discovery echoed the sort of off-balance sheet financing that has been discovered at NMC Health, which like Finablr was founded by UAE-based businessman BR Shetty. NMC’s shares have also been suspended after it discovered evidence of suspected fraud that cast doubt over its finances. Finablr’s chief executive Promoth Manghat has resigned and its shares have been suspended.
Travelex is the world’s largest retail currency dealer, with more than 1,000 bureaux and 7,000 staff. The board of Travelex is expected to meet today to discuss its future. Disruption at Travelex would also have a knock-on effect at major banks and retailers that outsource their foreign exchange services to the company, including Royal Bank of Scotland, Lloyds Bank and Tesco.
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