Quindell has been forced to clarify details of a share purchase made by its three directors last week, sending shares down more than 20 per cent in early trading.
Chairman Rob Terry, finance director Laurence Moorse and independent director Steve Scott spent £2m buying up 1.575m shares at around 123 pence per share. The purchase was funded by using existing shares as collateral.
The insurance claims processor has restated its total interest in the company’s ordinary shares after the repurchase deal was agreed, which had caused some confusion among investors when first announced.
Terry said: “In entering into the sale and repurchase agreements to provide finance, each of us purchasing directors relied upon assurances from EFH that, notwithstanding EFH's legal rights, the custom and practice of EFH was that the shares transferred would not be disposed of outright, other than in a default event and will be held by their custodians throughout the term of the agreement, nor would they engage in short selling activity.
"We have made this further announcement to ensure the market is aware of the actual number of shares transferred to date under the agreements.”
Shares in Quindell had fallen nine per cent after the deal was announced last Thursday. This morning they fell to as low as 23.75 per cent, though recovered slightly.
“The agreements are purely to provide funding for a two year term and I and Laurence intend to use the funds received under the agreement to purchase Quindell shares and to cover any associated potential tax liabilities and margin calls relating to the agreements, with Steve Scott intending to do the same and also cover certain other tax liabilities," Terry explained.
"The agreements would not have been entered into if the board did not remain confident of meeting full year market expectations and of the company's longer term prospects."