LONDON (Alliance News) - Globo PLC on Wednesday said it has reported "certain matters regarding the falsification of data and the misrepresentation of the company's financial situation" to law enforcement agencies in the UK, Greece and Cyprus, and revealed that it is the subject of an investigation by the UK's financial watchdog.
Globo describes itself as an enterprise mobility solutions company. It has suffered a woeful eight days, beginning Wednesday last week with yet another failure to issue high yield notes to investors. That was the tip of the iceberg.
When US hedge fund Quintessential Capital Management published a bearish report in which it accused Globo of "massively overstating" its revenue and profit, Globo's response was defiant: "Globo completely refutes all allegations made in this report." The company requested the suspension of its own shares from trading on AIM in order to "protect" shareholders' interests.
Over the weekend, Globo had a change of heart. A board meeting was held on Saturday to discuss the allegations in Quintessential Capital Management's report, and to decide on a course of action to resolve the situation. Globo initially decided it was time to call in a team of forensic accountants to investigate the allegations, until Chief Executive and founder Costis Papadimitrakopoulos stepped in.
At the board meeting Papadimitrakopoulos "brought to the attention of the board certain matters regarding the falsification of data and the misrepresentation of the company's financial situation". Together, Chief Financial Officer Dimitris Gryparis and Papadimitrakopoulos offered to resign. Gerasimos Bonanos, the chief operating officer, was suspended from his duties with immediate effect, pending investigations.
Globo then revealed that Papadimitrakopoulos had on the day after the board meeting informed it of previously unknown dealings in the company's stock.
Up to October 22, Papadimitrakopoulos sold 42.0 million shares in the company and pledged 10.0 million shares under a personal loan agreement with Lantau Holdings Ltd. The loan defaulted at the close of business on Monday as a result of the suspension of the company's shares from trading. Papadimitrakopoulos now holds 27.7 million shares in Globo, including those pledged under the loan agreement, equivalent to a 7.42% stake.
Canaccord Genuity Ltd resigned as the company's joint corporate broker on Monday.
Globo is now being investigated by the UK's Financial Conduct Authority. The company's shares remain suspended from trading.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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