Finablr, which owns Travelex, said that it discovered about $100 million of undisclosed financing, and that because of the discovery it didn’t feel assured of its financial health.
The $100 million is in undisclosed checks that were written before the company’s IPO two years ago, and they were possibly used as a security for financing arrangements for the benefit of third parties.
A 3.4 percent interest in Finablr was acquired by a fund belonging to Abu Dhabi state investor Mubadala. The purchase was made by MIC Capital Partners, which is operated by Mubadala Capital, a division of Mubadala Investment Co, according to the state fund.
Travelex shares were down almost 10 percent on Monday (March 16) morning before the FCA stepped in. The company’s chief executive, Promoth Manghat, has resigned, and corporate investigations firm Kroll was tapped to look into the company’s finances.
BR Shetty, the billionaire founder of the company, has also been dealing with suspended shares for hospital company NMC Health. The shares were suspended because of potential fraud.
U.S. short seller Muddy Waters criticized NMC in a report over the company’s accounting and leadership practices, and the FCA is currently investigating the situation. Some of the issues with NMC involve financing arrangements that weren’t disclosed to the company’s board. Finablr seems to be dealing with a similar issue.
Last week, an internal probe was launched at Finablr, and it said that it was moving toward dealing with a squeeze in liquidity.
Because of both the squeeze and the undisclosed financing, the board wasn’t able to accurately see the company’s position.
“[Constraints] have become amplified and have now reached a point where they are having a material adverse impact on the company’s operations, including resulting in the company no longer being able to provide certain payment processing services,” it said. “There is a material uncertainty about the group’s ability to continue as a going concern.”
Pirc, a corporate governance specialist, said that suspending both Finablr’s and NMC Health’s shares was “a historic financial and governance failure.”