Finablr And the Latest Troubles with Its Travelex Brand

The British foreign exchange company, Travelex is put on sale. It has been reported that in the best interest of the stakeholders, the Board of Travelex Holdings has decided to seek a buyer for the company. The Board is in discussions with creditors and would update stakeholders on the sale process.

Reportedly, Finablr, its parent company, was preparing for a potential bankruptcy. A month ago, it was said that at least $100 million in checks dating back from before its May initial public offering written by the company might have been used to finance third-party borrowing. However, there was not much clarity on what kind of borrowing it financed and who issued the checks. The company said that founder of NMC Health and Finablr, BR Shetty had pledged shares in both companies for loans as collateral. The trading of NMC shares halted along with Finablr by the United Kingdom’s financial regulatory body, the Financial Conduct Authority (FCA).

Although the company launched an internal enquiry last week, its existence is now under question, and market reputation along with investor’s confidence has gone for a toss. The company is not able to provide payment processing services.

The world’s largest retail currency dealer, Travelex, had its own share of troubles in recent past when the company’s reputation was crippled by a malware attack on New Year’s Eve and the company had no option other than putting its websites offline in nearly 30 nations to protect data and consumer confidence. Reportedly, to get its systems back online, the company had paid $2.3 million ransom.

To worsen things further, the coronavirus pandemic took a toll on Travelex along with the Travel & Leisure sector, which resulted in forced closure of its cash machines, exchange services and stores at airports.

About Finablr

Finablr (LON: FIN) is a worldwide facilitator for Foreign Exchange and Payment & Settlement systems supported by technology and innovation. With the profound administrative ability and steady focus on deploying the best practices across the industry. Finablr and associated groups, provide a wide range of tailored and trusted financial solutions across a broad system of payments platforms, digital channels and merchandising stores for consumers and businesses.

From the beginning to the destination, the company has all procedures in place, Finablr is present across the entire value chain of payments and foreign exchange. The group’s core offering includes an integrated platform which has best-in-class connectivity to global payment networks and operating capabilities.

Finablr is a preferred partner of choice for leading technology companies, global banks, financial institutions, mobile wallet & payment companies, and retailers. The Finablr platform driven by combination of technology and flexibility with significant economies of scale. Finablr had a transaction volume of nearly USD 115 billion for its customers in 2018 and processed over 150 million transactions. The company is home to some popular brands such as Travelex, Unimoni, UAE Exchange, Xpress Money, Ditto, BayanPay and Remit2India. The group deals with more than 100 regulators in more than 170 nations. The shares of the company last traded at GBX 11.03 on the LSE and presently are suspended.

Finablr’s Operational Update

On 12th March, the company issued an operational update, it had been adversely impacted by several factors and would take immediate steps to improve its current liquidity and cash flow position. Due to travel restrictions imposed to limit the spread of Covid-19, the transactions in the economy have dried out. Hence, the demand for payment & settlement systems along with foreign exchange has been reduced. The credit ratings of Travelex's bonds were downgraded; this was another major blow for the company. The company is facing a severe cash crunch at both Group and operational business level. In addition, Finablr has been facing antagonistic views in the market regarding association with NMC Health Plc’s management, which has affected the cash flow position of the company.

These factors play huge importance when it comes to a company’s reputation to access working capital requirements in order to run the business smoothly and its capacity to haggle longer-term financing. Due to these circumstances, the company was critically seeking appraisal of its liquidity and income position.

Statement regarding Q1 impact of cyber-attack and Covid-19

Travelex announced that it had successfully restored all its customer-facing systems in a phased and controlled programme following the cyber-attack that affected its business on 31 December 2019.

The company proactively decided to immediately cut off Travelex systems from the network and servers during the attack that helped in protecting the integrity of customer and partners data and contained the spread of the malware. Like every other good company, the Business Continuity Plan of the company was implemented promptly. As a result, the company was able to continue trading despite the precautionary shutdown, and most of the business remained operational.

Update on Covid-19

Given broad exposure of Travelex's business to airports and travel flows, the outbreak of Covid-19 has been horrible. With International travel coming to a halt, the revenue streams of the company have been hit badly.

Travelex going forward

Travelex estimates suggest that there will be a reduction of Underlying EBITDA of approximately £25 million on a like-for-like basis in Q1 2020, mostly attributable to the malware and above-mentioned circumstances in contrast to the similar period of 2019.

Travelex is likely to offset a significant proportion of this EBITDA reduction along with other direct costs as it has coverage from a cyber-insurance policy. However, the timing differences of EBITDA recognition and settlement of the insurance cover is yet to be figured out.

Travelex expects normal trading in the second quarter and third quarter of the fiscal year 2020 and does not expect the cyber-attack to have any material impact. The company expects the results for the fiscal year 2020 would factor the benefits of insurance coverage and cost optimisation steps taken by the business.

However, the company recognises the extent of the global turmoil caused by the pandemic, which cannot be estimated and with international travel coming to a halt, the full-year performance of the company is uncertain, and the impact cannot be assessed at this point in time.