EML shares tank on FPS probe
Shares in EML Payments tanked Wednesday after the firm confirmed that the Central Bank of Ireland is investigating breaches relating to money laundering and risk and control frameworks at Prepaid Financial Services, the Irish business acquired by the Australian vendor in 2020
Trading resumed Wednesay morning upon confirmation of the ongoing investigation, opening the floodgates to a wave of sell orders by insititutional investors that immediately wiped €500 million off EML’s share price.
EML intially agreed a €253.8 million fee plus an earn-out component worth £55 million for Prepaid Financial Services in 2019, By the time the deal closed, it had negotiated a €105 million discount, citing “economic realities” from the Covd outbreak as its primary reason for revising the purchse price.
Investors were particularly spooked by EML’s warning that “the directions, if made, could materially impact the European operations of the Prepaid Financial Services business, including potentially restricting its activities under the Irish authorisation”.
From January to March this year,PFS contributed 27% of EML’s revenues. EML says that it is as yet “unable to estimate the potential direct and consequential costs” and impact of the CBI probe on the group’s FY21 results.