At the beginning of this week, the Wirecard Group's shares continue to plunge on the stock market, while the payment specialist finds itself at the heart of a real financial scandal. Indeed, on Monday, the group announced that the 1.9 billion euros of cash that Ernst & Young, its auditor had refused to validate may not exist. We therefore propose a specific point about this news and its consequences on the stock market.
Following this announcement of the utmost importance, investors reacted strongly on the stock market. Indeed and on the Frankfurt stock exchange, the price of this stock fell by 39.32% this morning with a price at 15.67 euros, even though it had already lost more than 63% of its value on Thursday after first revelations and 36% on Friday.
In this morning's announcement, the group's board of directors stated that it was highly likely that the balances in the fiduciary bank accounts amounting to 1.9 billion euros did not exist. However, it should be recalled here that this amount represents more than a quarter of the Wirecard Group's total balance sheet. As we specified in our last news, the German group had indicated last week the withdrawal of its 2019 accounts and those of the first quarter of 2020, which allows to cancel loans for an amount of nearly 2 billion euros.
The Wirecard group has also indicated that it is pursuing constructive discussions with its lending banks concerning the maintenance of the credit lines and the continuation of its commercial relationship with them, a drawdown of which is due to expire at the end of this month of June.
The group is also currently studying the possibility of setting up a sustainable financing strategy with the collaboration of the investment bank Houliban Lokey. At the same time, this banking group is studying several types of complementary measures that could be put in place to ensure the continuation of its business activities, including likely cost reductions or restructuring, divestment or cessation of business activities and specific segments.
Last weekend, it is also known that Markus Braun, its Chief Executive Officer, resigned from his position and was temporarily replaced by James Freis. The latter was also appointed yesterday as replacement COO in place of Jan Marsalek, who may be dismissed soon.
It is not without reason that this affair and financial scandal is so closely affecting the Frankfurt stock exchange. Let us recall indeed that the Wirecard group had integrated the main index of this financial place in September 2018 by taking the place of the Commerzbank company. However, financial irregularities had already been pointed out in February 2018 by the Financial Time with regard to this group.