22nd Apr 2014 14:34
LONDON (Alliance News) - Quindell PLC said Tuesday it rejected assertions made in a report by Gotham City Research LLC, saying the note is "highly defamatory, deliberately misrepresentative" and that it "entirely rejects the conclusions that are made".
The consulting, software, and outsourcing solutions company's shares plummeted 27% Monday to 28.72 pence per share in reaction to the Gotham City note.
The 74 page report said Gotham City was unable to reconcile 42%-80% of Quindell's profits, stating that they are suspect as they are explained by sales to related parties owned and operated by Quindell Chief Executive Officer Robert Terry.
The report noted that Quindell, the second largest company on AIM by market cap, came into the public market through a reverse merger in 2011.
"Many low quality companies and outright frauds have historically entered the public markets via reverse merger," says Gotham City in the report.
The lengthy note goes into great detail about particular transactions by Quindell. Amongst other claims are that "Quindell's New York office does not seem to exist" and that, until 2008-2009, it was "little more than a country club run by Robert Terry" that started reporting "exceptional margins just in time for its public listing".
Quindell said it will release a more detailed response to the Gotham City report before the end of the week, but in the meantime is consulting with its legal advisers on what action it can take against Gotham immediately.
Quindell reiterated its confidence in meeting or exceeding market expectations in all of its key performance indicators in 2014.
By Hana Stewart-Smith; [email protected]; @hanassallnews
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