By Sinead Cruise and Chandini Monnappa
LONDON (Reuters) -British currency risk management company Argentex is in advanced talks with forex and payments solutions provider IFX Payments about a possible offer and emergency funding, as it battles to defend its business from whipsawing currency markets.
Argentex shares were suspended from trading on Tuesday after the company said its liquidity had significantly worsened due to sharp falls in the U.S. dollar, as trade tensions and President Donald Trump’s attacks on Federal Reserve Chair Jerome Powell spooked investors into dumping U.S. assets.
The company said on Wednesday that liquidity on its FX Forward and options book had deteriorated even further following margin calls, forcing it to step up discussions with liquidity providers to prevent it from becoming one of the first known casualties of an extended bout of financial market ructions.
“This further reduction in liquidity necessitates an immediate cash injection to ensure the company’s continued solvency, without which the board would have to take immediate steps to secure the company’s future,” Argentex said.
The dollar had been trading near multi-year lows versus the euro and the Swiss franc on Tuesday, while the yen hit a seven-month high.
Although discussions are at an advanced stage with IFX, Argentex said there can be no certainty that a firm offer will be made.
In addition to the possible offer, Argentex said it was in talks with IFX Payments on the terms of an initial bridging loan to bolster its liquidity over the near term.
The loan would provide immediate working capital flexibility but remained subject to agreement, the company said.
If the bridging loan is not agreed, Argentex said its board will take “immediate steps” to protect value in the business for the company’s creditors and other stakeholders.
The company said it had also received and rejected two additional non-binding proposals, from Lumon Acquisitions and from Terry Clune and Argentex’s former CEO Harry Adams.
Trading in the firm’s ordinary shares on London’s AIM will remain suspended pending a further announcement regarding the offer and loan, the company said.
Argentex offers currency risk and alternative banking services for businesses and financial institutions, and has offices in the UK, the Netherlands, Australia and the UAE.
According to its website, it has transacted around $200 billion for more than 5,000 clients since 2012, making payments in up to 140 currencies on their behalf.
Sky News reported on Tuesday Argentex was in talks about an emergency sale.
(Reporting by Chandini Monnappa in Bengaluru; Editing by Sonia Cheema and Jan Harvey)
