It has been a bad day for outsourcers with both Quindell and Serco taking baths.
Quindell (LON:QPP) continues to be a controversy magnet, and an attempt this morning to clarify last week’s controversial share sale and repurchase agreements entered into by three board members has only pushed the share price lower.
On Guy Fawkes Day, the company revealed that three directors had borrowed money from Equities First Holdings (EFH), using their existing shareholdings in Quindell as collateral, to finance the purchase of further Quindell shares.
In an attempted damage limitation exercise on Monday morning, the company attempted to clarify what is likely to happen to the shares over which EFH now has the rights.
EFH is under no legal obligation to retain the transferred shares, but it has undertaken not to use the voting rights attached to the shares it owns, Quindell revealed.
More importantly, EFH has pledged to it will not borrow Quindell shares for short-selling purposes, and that its broker or agents will not engage in any short-selling activity in relation to the shares that have been transferred by the three Quindell directors.
The message boards are all over this one, particularly as the shares are getting close to the level at which a margin call will be made on the collateral.
Serco (LON:SRP) is under new management and the traditional ‘kitchen-sinking’ process is now well underway.
A contract and balance sheet review has uncovered ‘impairments and onerous contract provisions’ of around £1.5bn.
Meanwhile, to shore up its finances the group is to launch a £550mln rights issue.
Investors headed for the exit faster than a prisoner in transit whose shackles have come loose.
Talking of which, security services firm G4S (LON:GFS) will not thank Fleet Street for drawing attention to the company spending nigh on half a million quid changing all the locks at one of the prisons it runs, after the keys went missing.
The case of the missing keys took place just days after G4S took over the running of Winson Green jail in Birmingham.
In happier news – though not from the outsourcing sector – Cairn Energy (LON:CNE) has had a result in Senegal, where it had made its second oil discovery.
The oil giant said the find was made at the SNE-1 exploration well located 100km offshore. ‘High quality oil’ was discovered at a depth of 1,000 metres in the Sangomar offshore block.
Ending where we started (in the insurance sector), Prudential (LON:PRU) has sold its 25% equity stake in the PruHealth and PruProtect joint venture to Discovery Group Europe for £155 million in cash.
“This transaction will enable Prudential UK to realise its investment at attractive terms while providing full strategic optionality to re-enter this market in due course,” the company said.