Troubled IT firm Quindell has parted company with its founder and chairman Robert Terry, as well as two other directors, after confusion and controversy over their recent share dealings.
Terry, finance director Laurence Moorse and non-executive director Steve Scott are all stepping down, the company has confirmed. They have all left the board immediately but Terry will stay on as a consultant while Moorse will remain at the company for up to a year to “effect an orderly handover.” Former Investec banker David Currie becomes temporary chairman.
The moves come a day after the company said joint broker Canaccord Genuity had quit, after giving notice in October.
Terry and the other two directors had announced they were buying shares in the company following its share price slump, using loans secured on their existing stakes. But it later emerged they had actually entered a sale and repurchase agreement with US group Equities First Holdings, effectively selling shares to raise cash to buy more.
When the company was forced to issue a clarifying statement, it became clear that Terry had sold more shares than he had bought. Investors who had seen the share price slump were furious at the seeming disparity between the two statements.
Following news of his departure Terry - the driving force behind the business - has attempted to explain the situation:
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.
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, rather than satisfying the margin call as this would now no longer make economic sense. This will draw a line under this agreement and I have no intention of making further use of this agreement or its like again.
The news has seen Quindell shares suffer another volatile day, falling as low as 47p but currently 4% higher at 57.75p, still close to a three year low.
The company was hit hard in April after a negative report from US short seller Gotham City, which wiped some £900m off the company’s value. Although Quindell refuted the Gotham City allegations and claimed a libel victory over the matter, the share price never recovered.
Recently it took full control of a joint venture with RAC designed to put “black boxes” in cars, in order to boost its cash flow.
