Scandal-hit payments firm Wirecard, which recently reported €1.9bn was missing from its accounts, used its Irish subsidiary as a guarantor for a €1.75bn revolving credit facility.
During an analyst call, Sacha Lurken, a restructuring partner in the Munich office of Kirkland & Ellis International, said the Frankfurt Stock Exchange-listed company - which filed for insolvency last week - also included its subsidiaries in Germany and the UAE as guarantors in the facility.
Speaking with the Sunday Independent, Lurken said the inclusion of the Irish subsidiary, Wirecard Payment Solutions Holdings, meant that "if the banks demand repayment, it is liable under this payment". It "remains to be seen" what happens with the Irish subsidiary, he said.
Last September, Wirecard's Irish subsidiary was also included among other subsidiaries as a guarantor in a 2019 offering memorandum for a €500m notes issue due in 2024. Wirecard's bonds due in 2024 are now worth 22c to the euro, according to Bloomberg.
In the offering memorandum, regarding risks to the guarantors' corporate structure, it said the Irish subsidiary "does not have any material assets and does not participate in the operations with the group's customers".
The memorandum adds that the Irish subsidiary’s ability to meet its obligations under the guarantee and notes is dependent on the profitability and cash flow from regional subsidiaries, as well as payments from respective subsidiaries in the forms of loans, dividends, fees or rental payments.
The Dublin-based subsidiary, which is reported to employ around 12 staff, is also described as the main holding company for the UK, and Ireland, “one of the group’s core European markets”. From Ireland, Wirecard, though trading companies called Wirecard UK & Ireland and Herview, offers payment services such as Fitbit Pay, which can be accessed through Fitbit smartwatches.
It also states that the Irish trading companies cooperate with banks and financial services providers so the Irish holding company can offer corresponding acquiring and issuing services in areas where Wirecard cannot use its own licence.
The Central Bank of Ireland said Wirecard AG, authorised in Germany, and Wirecard Card Solutions, authorised in the UK, have notified it of their intention to passport services into Ireland. It added it could not comment on its engagement with individual firms.
Following the missing €1.9bn, reports in the ‘Financial Times’ last week said Wirecard’s insolvency only affects its holding company. It said it was evaluating whether insolvency applications should be filed for subsidiaries.
The UK newspaper also said Wirecard had drawn about 90pc of a €2bn credit line with banks, including Commerzbank, LBBW, ING and ABN Amro.
The European Commission also asked its markets watchdog to investigate German financial regulator BaFin over the collapse of Wirecard.
Last week, the UK’s Financial Conduct Authority ordered Wirecard’s UK subsidiary to stop offering regulated activities. In Ireland, this led to all existing An Post Money Currency cards issued by Wirecard Card Solutions being suspended until further notice.
Wirecard failed to respond to a request for comment.
Sunday Indo Business