Watchstone Group PLC (LON:WTG), the insurance claims manager formerly known as Quindell PLC has confirmed that it is facing around a £600mln legal claim from the Australian law firm that bought its professional services business in 2015.
In reaction, Watchstone shares dropped 6%, or 9.5p to 140.5p in early trade this morning.
In a statement today, Watchstone said that following an announcement last year it has now received further correspondence from a firm of solicitors acting for Slater & Gordon (SGH) stating that it intends to issue proceedings by the end of this month.
READ: Watchstone faces claims from Slater & Gordon
The AIM-list group said that the letter states that Slater & Gordon to make a claim for a total amount of approximately £600mln “on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all.”
Slater & Gordon had to write down £674mln in the financial year to the end of June mainly due to the acquisition.
Watchstone said it “denies any misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor a misrepresentation claim have merit and will defend such claims robustly if proceedings are brought.”
Slater & Gordon has “continuously declined to disclose key evidence”
The firm pointed out that, despite multiple requests, Slater & Gordon has “continuously declined to disclose key evidence in its possession which would be relevant to the merits and quantum of its purported claims.”
Watchstone said it “believes this evidence will be available to it in the event that SGH issues proceedings and it intends to seek disclosure of such information at the earliest possible opportunity.”
The group added that it will make further announcements in due course, as appropriate.
Watchstone, which came under investigation by the Serious Fraud Office for historic business and accounting practices, faced an attack on its accounts by US short seller Gotham City Research when it was known as Quindell.