Insolvency litigation funder Manolete Partners has suffered a similar short attack to Burford following an online report that it was burning cash at a rate of knots, and is only worth 80p per share.
Damaging Article
The funder was the subject of a damaging article by a well-known tipster group called ShareProphets, and was issued by Tom Winnithrif on behalf of another party. The report alleged Manolete was in financial trouble and needed to urgently raise more cash.
By coincidence the report came out just a week after Manolete reported their results for the year ending 31 March 2020, as noted in our previous blog.
Manolete shares have lost around 20% of their value since last week, but recovered slightly following a rebuttal issued to the London Stock Exchange.
The response said it was not true to suggest that the company was ‘burning cash’ and said the article contained false and misleading allegations.
Manolete also said that the cash generated from settled cases during 2019 and 2020 has exceeded all expenses on closed cases and all company cash overheads. It did conceded however that costs underwent a ‘step-change’ or 48% increase to £4m, following the establishment of an in-house regional network of solicitors.
Manolete said there was ‘no basis’ for the suggestion it would need to issue new capital.
The response also added: ‘The board is confident that the company’s existing £20m RCF will be more than adequate to finance the business in the foreseeable future.’
They rejected allegations that settlements were ‘drawn out affairs’, as suggested in the article: the company said it had an ‘excellent track record’ of collecting on payment plans agreed with debtors.
Manolete shares now stand at 415p down from 540p following the report.
Manolete Partners Plc is a United Kingdom-based company that invests in insolvency and insolvency-related claims. The Company is engaged in acquiring and funding insolvency litigation financing.