WH Ireland shares were in freefall on Friday after the broker announced financial difficulties and the results of a placing completed at an 86.67% discount to last night’s closing price.
WH Ireland shares were down 66% at the time of writing after warning their cash had fallen below levels required by the FCA and had to urgently raise funds to avoid collapse.
News of the placing was released alongside a trading statement outlining poor performance in the three-month period ended 30th June. WH Ireland recorded a pre-tax loss of £1.1m in the period.
The broker is suffering in the face of lower capital markets activity and sees the challenges continuing until later this year.
In a statement released to the market, WH Ireland outlined the reasons for the placing:
“The Directors consider that, in light of the financial position of the Company set out above and given the challenging current market conditions (as well as the macro-economic pressures which continue to impact investment activity both in the UK and globally, across all sectors in which the Group operates), it is necessary urgently to boost the Company’s capital position through the Placing.”
The situation at WH Ireland has become so severe their cash levels dropped below their regulatory capital requirements and they have drawn up plans for an orderly wind-down as required by the FCA to protect consumers. WH Ireland said they would transfer clients to new advisors in such an event.
The broker and wealth manager said they hoped a wind-down could be avoided and were considering steps to reduce headcount and senior staff will take pay cuts. The company said these measures combined with today’s capital raise should provide a stable base going forward.
Phillip Wale, CEO, commented:
“The proceeds of today’s Placing bolsters our regulatory capital and together with the cost reductions we are implementing, we believe provide a stable platform from which the Company can navigate these challenging markets. I am grateful for the support of our existing and new shareholders and believe we are in a stronger position to take advantage of better market conditions as and when they come.”