Quindell Plc announced Monday that Canaccord Genuity Limited resigned as one of its joint brokers, sending shares down by as much as 24% and extending a torrid fortnight for the beleaguered insurance outsourcer.
The past few months have been disastrous for the insurance claims processor as its market value has lost over £2 billion since a short-selling attack in April.
The latest upheaval
Quindell Plc announced Monday that Canaccord Genuity Limited submitted its one month notice of resignation as the insurance outsourcer’s financial adviser and joint broker on October 21, 2014, but that the company has agreed that the resignation is effective today.
The firm’s share price took a hammering in recent days. Its largest institutional investor Fidelity revealed last week that it had almost halved its stake to 4.9% from as high as 9.8% at the end of June.
Quindell’s shares have plummeted over 48% in the last seven trading sessions.
The insurance outsourcer’s sole remaining broker is Cenkos Securities. Earlier Canaccord had issued a series of “Buy” recommendations on Quindell’s stock, the last of which followed the outsourcer’s announcement that it had signed a telematics deal in Canada with a major insurer.
Quindell denies need for additional cash
Yesterday, the Sunday Times reported that the beleaguered insurance services company has opened talks with at least two hedge funds in recent weeks about a potential cash injection. Apparently Quindell went to the hedge funds after failing to interest banks in a deal. However, Quindell insisted that it had no need for additional cash.
Last Monday, Quindell’s shares dropped nearly 19% after it was disclosed that it faced questions over a loan agreement facilitating its chairman and two others to purchase the company’s stock. The same day, the company went into damage control mode explaining what was likely to happen to the shares over which Equities First Holdings (EHF) now has the rights.
Last May, Quindell was forced to clarify its use of a derivative to complete an acquisition, having initially incorrectly described the instrument to analysts. This year it abandoned a much-vaunted plan to move to a listing on London’s main stock exchange, following the release of a dossier of allegations from short-seller Gotham City Research.
In April, U.S.-based Gotham City Research released a scathing report suggesting that Quindell’s reported profits are materially incorrect, its operations are exaggerated, and its shares are worth no more than 3 p per share. However, the insurance processor successfully sued for libel over the report.