Quindell boss quits over share trade controversy
THREE directors of Quindell, including chairman Robert Terry, have agreed to leave the business following a controversial share deal.
The legal, insurance and telecoms outsourcing group, has bought five North West businesses in recent years, including Liverpool personal injury law firm Silverbeck Rymer and Blackpool’s AI Claims.
The group has lost about £2bn from its market value since April when it was attacked by short sellers.
But an attempt by Mr Terry to restore confidence in the business by buying shares backfired. Last week the company admitted that three senior directors, Mr Terry, Lawrence Moorse and Steve Scott, had actually been net sellers of its shares.
A statement on November 5 titled “director share purchases” explained how they had bought 1.5 million Quindell shares with a loan from US-based Equities First Holdings which required they put up existing shares as collateral. By November 10 Quindell said these shares had actually been sold to EFH.
The turmoil around Quindell has affected other AIM firms that used similar funding arrangements. Shares in fracking firm IGas have been affected and last week the group put out a statement noting the “recent movement in its share price” and saying that a similar deal conducted with EFH by chief executive Andrew Austin in January complied with AIM rules.
In January IGas said Mr Austin bought 300,000 shares at 135.38p taking his total to 10.9 million, or 5.4% of the company. He borrowed the money from EFH which took 7.5 million shares as security. This stock will be returned when the loan is repaid after a three-year term. The original statement said, “Under the terms of the facility the lender is contractually prohibited from short selling or voting the shares during the term of the loan”. Critics of such deals say the shares have effectively been sold and this change should be reflected in the shareholder register.
Mr Terry will leave with immediate effect but will be retained as a consultant. Laurence Moorse, finance director, will step down following next year’s AGM, and Steve Scott, a non-executive, will leave immediately. David Currie will become non-executive interim chairman.
In the North West Quindell owns: Prescot-based legal costs firm Compass Cost Consultants; Liverpool-based Intelligent Claims Management and law firm Silverbeck Rymer; Blackpool’s AI Claims; and Manchester-based Accident Claim Helpline.
Mr Terry said: “I entered into the share transactions announced on 5 November 2014, with the best of intentions for the Company and all shareholders and it would have been my intention to acquire more shares were it not for the restrictions due to the discussions leading to this announcement. I am clearly disappointed and sorry that events turned out as they did.”
Mr Currie said: “Rob is the founder of the business and has made a huge contribution to Quindell’s growth to date and the board thanks him for that. We look forward to completing our search for a new chairman and additional non-executive directors as soon as possible.”