Ferranti Loses One-Third of Its Market Value
LONDON — British defense contractor Ferranti, shellshocked by apparent fraud at its U.S. unit, which has cost it almost $300 million, lost about a third of its market value Tuesday when its shares resumed trading on the London Stock Exchange.
Shares in Ferranti International Signal PLC opened at 81 cents (50 pence), 32% below the $1.19 (73.5 pence) price at which they were suspended Sept. 11 when the scandal broke.
Within seconds, the shares dipped even further, but then recovered to close at 91 cents (56 pence). In February, they touched their high for the year at $1.83 (1.13 pounds).
The company, which specializes in military electronics, has been rocked by what it said was a costly fraud involving contracts of its U.S. subsidiary, ISC Technologies, based in Lancaster, Pa.
Ferranti has alleged that it inherited three fraudulent contracts when it bought ISC, a weapons firm selling mainly to Third World customers, in 1987.
As a result, the British company will have to write off $299 million (185 million pounds) and halve its stated 1988-89 profits.
Ferranti has said it is discussing a range of options to bring in new capital, including a complete takeover, a rights issue and a minority partner.
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