25th Mar 2020 14:34
(Alliance News) - Watchstone Group PLC warned on Wednesday it does not know when meetings can be held to approve a capital return.
Watchstone, which now only has insurance operations, carried out a simplification process in 2019, which included resolving legacy issues, reducing costs, and planning a shareholder return.
Legacy issues included a legal claim against Watchstone by Australian law firm Slater & Gordon UK Ltd related to its GBP637 million purchase in 2015 of Watchstone's professional services arm. Slater & Gordon alleged Watcsthone had fraudulently misrepresented the unit during the sale.
Shortly after the deal, Slater & Gordon was forced to book a GBP880 million impairment related to the acquired business after the UK Serious Fraud Office opened an investigation into the unit over past accounting practices.
Watchstone and Slater & Gordon agreed on a settlement which will see Slater & Gordon receive GBP11 million from cash held in escrow with the remaining GBP39 million being distributed to Watchstone.
Regarding the shareholder return, Watchstone plans to return at least GBP50 million by the end of June this year.
However, it said on Wednesday: "Unfortunately, due to the ongoing Covid-19 crisis and related government restrictions, it is currently unclear when or how a general meeting relating to this matter could be held for shareholders to approve the transaction or when the courts would be able to hear the matter.
"The board continues to work closely with its legal advisers to arrange the next steps as soon as practicable but, at this stage, it is unable to confirm it will be able to complete the process on the original timetable of before the end of June 2020."
Shares were 4.7% lower on Wednesday in London in afternoon trade at 130.50 pence each.
By George Collard; [email protected]
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