Firm censured for market abuse pays more than £900,000 compensation

Harrogate-based company Redcentric has begun making payments to compensate shareholders after it was censured by the Financial Conduct Authority (FCA) for committing market abuse in 2015-16.

In an update today, the AIM-listed IT managed services provider says it has so far paid out £912,471 worth of cash restitution.

A total of 5,380,138 net relevant share purchases are subject to the Restitution Payments scheme. No ordinary shares have been allotted.

Redcentric first announced the £11.4m compensation programme on 26 June.

Its update this morning explains: “As previously announced at the time of the announcement of the Scheme, the company had entered into a Settlement Deed with Harwood Capital whereby funds managed by it agreed to waive all their claims against the company in exchange for the issue of 308,000 Ordinary Shares, in the same manner as if they had participated in the Scheme and elected to receive their entitlement wholly in Ordinary Shares.

“The Ordinary Shares issued to Harwood Capital under the terms of the Settlement Agreement were admitted to trading on AIM on 14 July 2020.”

As previously reported, this is the first time that an AIM-listed company has offered to implement its own scheme to pay compensation.

Affected shareholders can choose to take compensation in cash, shares, or a 50-50 split of the two.

Redcentric has accepted it issued unaudited interim results and audited final year results which “materially misstated its net debt position and overstated its true asset position”.

The FCA said investors were misled and paid more when purchasing shares than they would have done had they known the true position, and estimated the losses to those shareholders at £43m.