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Wirecard seeks new financing strategy as Moody's downgrades firm to junk

Wirecard’s logo can be seen on a smartphone held in front of a stock market chart.

Alexander Pohl | NurPhoto | Getty Images

German payments firm Wirecard said late on Friday it had hired U.S. investment bank Houlihan Lokey  to develop a new financing strategy as Moody’s slashed the company’s rating to junk following the disappearance of 1.9 billion euros ($2.3 billion).

The scandal-hit company is desperately seeking to reassure investors after its search for the missing cash hit a dead end in the Philippines, prompting ratings agencies to react. The company’s CEO quit on Friday.

“The downgrade of Wirecard’s ratings and review for further downgrade reflect the accounting irregularities and related implications on the company’s liquidity and financial profile following its failure to publish the already postponed audited consolidated accounts for 2019,” Moody’s said late on Friday.

The company’s postponement of the audited statements could trigger high and immediate refinancing needs, according to analysts who cover the company, prompting Wirecard to announce late on Friday that it had hired Houlihan Lokey to overhaul its financing strategy.

Neil Campling, an analyst at Mirabaud, said on Saturday “there is no update yet about either the missing 1.9 billion euros (1.7 billion pounds) or the results of the discussions with the lending banks concerning credit lines.

“The deadline for audited results was June 19, yesterday, otherwise 2 billion euros of loans could be terminated.”

Dutch shareholder group VEB said on Friday it would seek compensation from the German firm’s accountants EY.

“EY has played a significant role in the whole Wirecard scandal, not only from its inability to detect the flaws in Wirecard’s escrow account in former years,” VEB said.

“Just when EY should have played a protective and clarifying role, it left the shareholders out in the cold,” it added.

A spokeswoman for EY in London said on Saturday that it had not received news of legal action by VEB and declined further comment.

VEB has said Wirecard’s former CEO told investors on May 3 that EY had reassured the company that they had no problem signing off on the 2019 audit. That wrong-footed the markets, leading shareholders to incur losses, according to VEB.

Wirecard shares closed down 35% on Friday after the firm said it could not issue audited financial results.

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