(Alliance News) - Network International Holdings PLC on Thursday said it plans to review and issue a response to a critical report published by short seller ShadowFall Research in relation to the company's link with failed German digital payments provider Wirecard AG.
On Monday, the FTSE 250-listed payments solutions provider reported no evidence of wrongdoing by Nairobi-based online commerce platform Direct Pay Online Group with regards to DPO subsidiary AnconaOnline GmbH's connections with Wirecard.
Network International is in the process of buying DPO for USD288 million. The transaction is expected to complete in the first quarter of 2021. Acona, which "processed negligible volumes in relation to European cardholders purchasing travel services from DPO's merchant customers", has been in liquidation since the end of 2018. It was purchased from former Wirecard executive Dietmar Knoechelmann and others in 2013.
The Middle East and Africa-focused company said it appointed Freshfields Bruckhaus Deringer LLP to investigate DPO following the collapse of Wirecard, which admitted in June to a EUR1.9 billion hole in its accounts. Top Wirecard executives were arrested on fraud suspicions soon after.
Freshfields Bruckhaus Deringer said it did not find any evidence of any wrongdoing by DPO or its management, stating that "no Wirecard directors or executives, past or present at any time, have ever been involved in the management of DPO."
However, short seller ShadowFall Research cast aspersions on Network International, claiming: "It appears that Network International has form in buying businesses at a significant cost, only to several years later impair almost all the value which was paid in cash. We believe this should raise concern. Especially in the context of its latest USD288 million acquisition of DPO Group."
"Several of the metrics provided by Network International for DPO we regard as contradictory to historical reporting. Further, the projections provided by Network International's management relating to DPO, in our view, make little sense," it added.
On Thursday, Network International noted the report, saying: "We take any critique of the company seriously. While we believe many of the issues raised have already been addressed, the historical nature of certain statements in the report means that a full response will take some time."
The company expects to publish a response by the end of January 2021.
By Ife Taiwo; ifetaiwo@alliancenews.com
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Network International (NETW)