Cobham Faces Insider Probe Over 500 Million-Pound Share Sale

Updated on
  • U.K. aerospace supplier referred to FCA’s enforcement division
  • Investigation is latest blow for aerial-refueling specialist

Cobham Plc is being investigated by the U.K. Financial Conduct Authority for its handling of inside information prior to a 500 million-pound ($630 million) rights offering announced almost a year ago.

The British maker of defense electronics and air-to-air refueling gear was told on Friday that the matter had been referred to the FCA’s enforcement division, according to a statement from the company Monday, which said a separate rights issue proposed this month “remains on track.”

Shares of Cobham fell as much as 4.1 percent after the disclosure and were trading down 1.8 percent at 125.90 pence as of 1:16 p.m. in London. That extends their decline this year to 23 percent and reduces the company’s market value to 2.17 billion pounds.

The probe is the latest blow to Cobham after it endured five profit warnings in 18 months, capped by more than 830 million pounds in charges and goodwill impairments linked to work on Boeing Co.’s delayed KC-46 tanker plane and the purchase of semiconductor-maker Aeroflex.

Cobham said it intends to cooperate with the FCA investigation, which concerns the “handling of inside information” prior to an April 26 trading update that also disclosed plans for the rights offering, and that it will update the market on the outcome in due course.

The FCA declined to comment.

Bob Murphy, who was Cobham’s chief executive officer at the time of the trading update, left in December as earnings came under pressure, with Chairman John Devaney departing on Jan. 1.

Current CEO David Lockwood pledged this month to review the “breadth” of Cobham’s business after announcing a further 500 million-pound share issue needed to pay down borrowings and help comply with debt covenants.

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