Travelex-owner Finablr halves in value after coronavirus liquidity warning
Shares in Finablr (FIN.L) plunged by more than 60% on Thursday after the Travelex owner said that a coronavirus-related “liquidity squeeze” could put significant constraints on the operation of its business.
Finablr said that travel restrictions related to the outbreak had reduced demand for its foreign exchange and payment services — in turn restricting the movement of physical currencies that is needed to run its business.
The company pointed to liquidity issues at multiple levels of its business and “adverse perceptions” about potential spillover effects from scandal-hit NMC Health, which shares common shareholders with Finablr.
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Finablr said that even though its management, operations, and finances are “independent and separate” from NMC Health (NMC.L), the perceptions had “exacerbated” stress on the company's cashflow.
NMC Health has been plagued by accounting issues in recent weeks, and on Tuesday revealed it has almost $3bn more debt than it previously realised.
Finablr said on Thursday that these factors are placing “significant constraints” on its ability to access the daily liquidity and cashflow needed to manage its business effectively, as well as on its ability to negotiate longer-term financing.
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“Due to the fast-moving nature of the events and circumstances referred to above, the company is urgently seeking to complete its assessment of its liquidity and cashflow position and negotiate the steps that are necessary to address its short and longer-term financing needs,” Finablr said in a statement.
The crisis comes after Travelex said earlier this month that it expected to suffer a multimillion-pound earnings hit from a New Year’s Eve cyber attack that left its systems down for weeks, and the outbreak of coronavirus.
Several banks, such as Barclays (BARC.L), HSBC (HSBA.L), and Lloyds (LLOY.L), rely on Travelex for foreign currency trading, and were thus unable to sell foreign currency to customers for a period.