Australia’s Link administration said on Wednesday that Britain’s financial regulator could fine the company’s UK unit £50 million ($56.86 million) in addition to a potential £306.1 million compensation. million for his management of a now defunct fund.
The potential payment of the fine and compensation casts doubt on the share registry firm’s nine-month takeover talks with Canadian Dye & Durham DND-T, which has already cut its offer by a fifth from compared to the price agreed at 1.95 billion Australian dollars ($1.30). billion).
“It went from bad to worse for Link. Link’s announcement today makes it clear that it now faces liability of A$605 million,” DND communications manager Wojtek Dabrowski told Reuters in an email response.
“Given what’s been disclosed in Link’s latest financials, it’s unclear how they’re going to pay for this.”
Shares of Link fell 5.2% to A$3.26, hitting their lowest level since June 16 and trading at a 14.4% discount to the last 3 month takeover bid. AU$.81 each.
Growing hurdles to the Link-DND takeover underscore the growing problem of execution risk in Australian M&As in a year marked by equity market fluctuations and an intransigent regulatory approach.
The British company Link Fund Solutions Ltd (LFSL), which managed the LF Woodford Equity Income Fund (WEIF), is under investigation by the British Financial Conduct Authority (FCA) for the collapse of the fund in June 2019.
The FCA said on Wednesday that Link had 14 days to say whether he would challenge his proposed fine before an independent panel, or resolve the matter by agreement and thus obtain a postponement.
The FCA said its reparations figure did not reflect any amounts that may be due to anyone, including fund members, as a result of potential wrongdoing by other parties.
“The remedy determined by the FCA is based on misconduct rather than losses caused by fluctuations in the market value or price of investments,” the watchdog said.
Link said Wednesday that he had made no commitment to fund or financially support LFSL, and considered any liability related to the investigation to be limited to the fund manager.
LFSL was the authorized corporate manager of the £3.7billion WEIF, which closed in October 2019, and whose assets were chosen by veteran star manager Neil Woodford.
Woodford has been criticized by lawmakers and investors for holding a large number of illiquid assets, making it difficult to meet buyout calls after months of underperformance.