British currency risk management company Argentex (AGFX.L) is in advanced talks with forex and payment 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 liquidity had worsened due to sharp falls in the U.S. dollar, as trade tensions and President Donald Trump's criticism of Federal Reserve Chair Jerome Powell spooked investors into dumping U.S. assets.
The company said on Wednesday liquidity on its FX Forward and options book had deteriorated even further following margin calls, forcing it to step up talks with liquidity providers to prevent it from becoming one of the first known casualties of an extended bout of financial market turbulence.
"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 traded near multi-year lows versus the euro and Swiss franc on Tuesday, while the yen hit a seven-month high.
Although discussions with IFX were advanced, Argentex said there was no certainty a firm offer would be made.
Argentex also said it was in talks with IFX Payments on the terms of an initial bridging loan to bolster near-term liquidity. The loan would provide immediate working capital flexibility but remained subject to agreement, it said.
If the bridging loan was not agreed, Argentex said its board would take "immediate steps" to protect value in the business for the company's creditors and other stakeholders.
The company said it had received and rejected two additional non-binding proposals, including from payment services provider Lumon Acquisitions and from Argentex's former CEO Harry Adams.
Separately on Wednesday, Lumon said it was prepared to make a firm offer for Argentex and urged it to resume talks. Lumon is backed by alternative asset manager Pollen Street, which invests in financial and business services, and technology.
Trading in Argentex's ordinary shares on London's AIM will remain suspended pending a further announcement regarding the offer and loan, the company said.
Sky News reported on Tuesday that Argentex was in talks about an emergency sale.
