Travelex discovers $100m in undisclosed cheques

Finablr, the FTSE 250 global payments and foreign exchange platform which owns the Travelex outlets, has been forced to suspend its shares over undisclosed cheques 

The company said it cannot accurately assess its financial position after discovering $100m (£81m) of undisclosed cheques.

According to a statement to the London Stock Exchange, the cheques may have been used as security for financing arrangements for the benefit of third parties. They were written by group companies and date back before its initial public offering (IPO) in May 2019.

The statement said: ‘The existence of these cheques has only recently been brought to the attention of the board and urgent investigations are ongoing.’ 

Late last week Finablr indicated it was experiencing ‘significant constraints’ on its access to the daily liquidity needed to manage its business effectively and its ability to negotiate longer term financing, and has now said the issues have worsened.

Its latest statement went on: ‘As a result of the foregoing events, the board is unable accurately to assess the financial position of the company and there is a material uncertainty about the group's ability to continue as a going concern.’

In response to the crisis, CEO Promoth Manghat is to step down from his role, as well as from all other directorships and other offices of entities within the Finablr group.

The board has decided to establish a committee of its independent non-executive directors to carry out a comprehensive review of the company's liquidity and cashflow management functions, its financial and debt position, and its strategic options. 

The company has appointed Kroll to carry out a more comprehensive review of related-party transactions and on and off-balance-sheet debt, including the issues regarding the cheques and any other contingent liabilities.

The board has decided that the company will appoint a further accounting advisory team to support and strengthen its finance function with a focus on liquidity. 

A further announcement will be made once the appointment is confirmed. It is also looking to hire a new independent financial adviser.

Both Finablr and NMC Health, which has also reported significant accounting issues this month, were founded by the UAE based Indian billionaire Bavaguthu Shetty.

NMC Health’s CEO, who stood down after these issues emerged, was Prasanth Manghat, the brother of the Finablr CEO.

At the beginning of this year Travelex admitted it was being held to ransom by hackers after a cyber-attack meant the business had to turn off all computer systems and carry out processes manually.

There were several weeks of disruption after hackers claimed to have copied more than 5GB of users’ personal data and demanded as much as $6m from Travelex.

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