Embattled insurance outsourcer Quindell’s attempt to explain opaque share-dealing by three directors backfired today as the shares plunged by as much as 25%.
Chief executive Rob Terry, finance director Laurence Moorse and non-executive Steve Scott have taken loans secured on their own shares to fund the purchase of £2.2 million more in Quindell shares, which they believe are “materially below” their true worth.
But today’s detailed clarification to a complex deal first unveiled last week sent the stock into another tailspin amid City worries over “jiggery-pokery”, as it emerged loan company Equities First Holdings was only prepared to lend on the shares at a price well below their closing value on Friday.
Terry transferred 8.85 million shares over to EFH and received £7.47 million in return — an average price of just 84.5p. EFH is under no obligation to hang onto the shares although it will not vote them, and it has pledged not to use them for short-selling purposes.
But the big haircut taken by EFH on the shares — far below Friday’s closing price of 118.5p — spooked the City, sending Quindell as low as 88.75p at one stage, before recovering.
Mike van Dulken at Accendo Markets said the update “served only to generate more investor discontent with such jiggery-pokery”.
“Quindell is not doing anything to make life easier for itself, releasing what can only be surmised as a highly confusing update,” he added.
If the price falls more than 20% below the value at which they were transferred to EFH — around 68p — the directors will have to put up more stock or cash as collateral.
Quindell successfully sued research firm Gotham City, which called the firm “a country club built on sand”, but shares have fallen 8% since April.
Terry said: “The agreements would not have been entered into if the board did not remain confident of meeting full-year, market expectations and of the company’s longer-term prospects.”
