Wirecard mulls disposals and restructuring after accepting €1.9bn cash

Wirecard may sell off parts of the business as it acknowledged that the €1.9bn of cash that it had been claiming on its balance sheet does not exist.

The German payments company, which is a key cog in Europe’s financial infrastructure between consumers, retailers, banks and credit card issuers, said it was in negotiations with a consortium of banks and examining measures to ensure the business keeps operating, including cost reductions, restructuring or closing down some part of the business. 

It also appointed investment bank Houlihan Lokey on Friday to help it assess possible financing options.

READ: Wirecard rocked as auditor EY refuses to sign off accounts over missing cash

Last Thursday, auditors EY refused to sign off on the accounts for 2019 due to €1.9bn of cash going missing and as the accounts unpublished by Friday this meant lenders could call in roughly €2bn of loans. 

Markus Braun, Wirecard’s founder and chief executive, resigned on Friday.

The missing €1.9bn, which was supposed to be sitting in bank trust accounts in two Philippine banks, had been assumed by the company to have been part of a so-called Third Party Acquiring business, it explained in a statement on Monday.

As this had been reported as an asset in its financial accounts, Wirecard said it was therefore withdrawing its preliminary results for 2019, its first-quarter results for 2020, its outlook for 2020 and its Vision 2025 five-year prognosis, while not ruling out possible effects on previous years’ results. 

The Munich-based company said its IT systems, on which many other companies rely, continue to work “without limitations”.

Alexander Darwall, manager of the FTSE 250-listed European Opportunities Trust PLC (LON:JEO), sold out of his large stake in Wirecard on Thursday.

“I’m extremely sorry for what’s happened. It’s a great shock. It’s the biggest mistake I’ve made,” he told the Times newspaper.