By Tom Winnifrith, The Sheriff of AIM | Wednesday 14 June 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Oh boy this is going to be fun. It is one of those battles where you want both sides to lose badly. Like Germany vs Argentina at football or a ratings war between Jonathan Ross and Simon Cowell. But Slater & Gordon (SGH) has now formally served Watchstone (WTG) with High Court proceedings claiming breach of warranty and/or fraudulent misrepresentation for a total amount of up to £637 million plus interest. Watchstone says it will defend this robustly. Boy this will be fun.
S&G is of course defending three actions from its shareholders claiming it cooked its books both before and after it splashed out £637 million to buy the fraudulent and worthless Quenron assets. At the time its hapless management insisted that they had done full due diligence even though we presented S&G with clear documented evidence that Quenron was a fraud. And that is perhaps an indication that the Aussie poltroons start on a sticky wicket.
But we do not yet know what warranties Quenron gave S&G. There were individuals from the ancien regime of king fraudster Rob Terry, such as CEO Rob Fielding (the man who took a £2 million bung when Quindell bought a worthless business from a convicted Nigerian fraudster) who were involved in the sale process.
The SFO investigation into Quenron continues apace and it will no doubt be looking at the evidence presented with some interest. Has it interviewed former HR Manager Mrs Jill Harrison, as a witness of events not a participant, yet as I wonder?
For S&G this is a "hail Mary pass". It is fucked anyway so if it blows a few tens of millions on this why not? If it wins it gets to survive. If it loses, well it was toast anyway. For Watchstone it is a bit more serious. The costs of defending this will eat into its cash pile at an alarming rate and there is no way it will get the costs back from the Aussies. So if it wins it burns a stack of cash, if it loses it is toast. Either way S&G ( which has a tough case given the public statements on due diligence by its useless managers) is a sell but so too is Watchstone.
Order buckets of popcorn and gallons of beer and bring it on. I look forward to seeing all these bitchez in Court.!
Never miss a story.
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments are turned off for this article.
Search ShareProphets |
Stock market news |
Recent Comments |