Travelex, the UK exchange group, went on sale in the latest blow to parent company Finablr, the global payments group, which admitted last month that it may need to prepare for possible insolvency.
Travelex, the world’s largest retail currency distributor, was founded by Lloyd Dorfman over 40 years ago. It was acquired by Indian businessman BR Shetty in 2014, who then launched the business into the larger Finablr group last year at around £ 1.2 billion.
Shetty also founded NMC, the health care company at the center of an alleged fraud that left him with debts of approximately $ 6.6 billion.
Travelex was hit by a damaging cyber attack earlier this year and has since fought against the impact of the coronavirus. The pandemic has forced him to close his stores and exchange services at airports. Its activity covers 60 countries, including a network of more than 1,000 ATMs.
Travelex said on Wednesday that its board of directors had decided to look for deals for the group and had informed Finablr of its decision. It “was part of his ongoing assessment of strategic options to maximize value for his stakeholders,” he said.
The company said interested bidders should contact PwC and that it will update “the sales process and parallel discussions with creditors, if applicable.”
The price of Travelex listed bonds represents around 25% of the nominal value of the debt, said a person close to the group, which implies no net worth for Finablr but perhaps a part for holders of Travelex bonds. . Debt holders could seek to realize this value either by taking control of Travelex, he said, or by supporting a sale. Another person close to the talks said that a debt swap for stocks could be arranged with bondholders.
Based on unaudited accounts last month, Travelex said that the underlying profits would be reduced in the first quarter of 2020, mainly due to the cyber attack. Since the beginning of March, the Covid-19 epidemic has resulted in an increase in the number of airline cancellations and airport closures. They may also worsen his financial situation, he added.
The company said it is unlikely to meet its first quarter revolving credit facility covenants, but will use its grace period to request lender exemptions.
A concern raised by Travelex stakeholders concerns the difficulties encountered by the indirect parent company, Finablr, and its shareholders. Finablr’s shares have been suspended after asking advisers to prepare for possible insolvency following the discovery of $ 100 million in checks held secret by its board of directors issued by group companies before it was introduced on the stock market in 2019.
Mr. Shetty and other Finablr representatives, including son Binay Shetty, former EY executive Abdulrahman Basaddiq and former Finablr Promoth Manghat chief executive, resigned from the Travelex board of directors this month last, which actually separated the company from its parent company. The Travelex group has a legal and financial structure capable of operating separately.
“Travelex has never been fully integrated,” said a banker close to the company. “It was a separate entity and easy to detach.”
The decision to sell the UK branch of Finablr comes amid unrest in other companies founded by Shetty.
NMC, the UAE’s largest private health care provider, was forced into humiliating revelations that tripled its reported debt to $ 6.6 billion. Its main creditor, Abu Dhabi Commercial Bank, placed the company under administration.
The troubles at NMC, triggered by a report from a book seller questioning his finances, have been transferred to Mr. Shetty’s financial services platform. When Finablr warned that it could cease operations, the UAE central bank took control of UAE Exchange, the UK-listed entity’s Abu Dhabi money transfer house.
Providing the bulk of Finablr’s revenue, UAE Exchange was struggling to complete customer transfers after lenders removed working capital lines.