The shares of Quindell PLC (LON:QPP) plummeted after disclosing that its founder and former chairman Robert Terry substantially reduced his position in the company. The stock closed 34 pence, down by more than 25% today.
Terry currently holds 13,047,189 shares or 2.99% of the outstanding ordinary shares of Quindell PLC (LON:QPP). He previously owned around 38.1 million shares. He informed the management about the disposal of his ordinary shares of 15 pence each after reaching the relevant disclosure threshold.
Controversial stock transaction
Last month, Terry stepped down as chairman of the company in the wake of a controversial stock transaction. Quindell’s finance director Laurence Moorse and non-executive director Steve Scott also resigned from their positions due to the controversy.
Terry together with Moorse and Scott revealed that they were purchasing shares of Quindell PLC (LON:QPP) using loans secured on their stakes following a price decline. However, the executives actually entered a sale and repurchase agreement with Equities First Holdings, which means they sold their shares to raise cash to buy more.
Terry sold more shares than he had purchased during the November 5 stock transactions. As a result, the stock price of the company declined.
“In view of the share price performance of the last few days, it is likely that a margin call will be made in relation to the share transactions and, at the current share price, I would expect to relinquish my rights to acquire 8,850,000 shares under the EFH sale and repurchase agreement…,”said Terry in a previous statement.
Quindell hired PwC to conduct independent review
Quindell PLC (LON:QPP) recently announced that it hired PwC to conduct an independent review after the recent changes in its board of directors. According to the company, PwC will review its “main accounting policies and expectations as to cash generation into 2015.”
The company said its leadership is still satisfied with the overall trading performance of the group throughout the period despite encountering a number of distractions. However, Quindell PLC (LON:QPP) warns that “the growth in cash receipts in the final quarter of the year has not been as significant as previously anticipated.”