Yahoo Finance 888 shares slump as CEO departs and VIP accounts in Middle East suspended
By Scott Kanowsky
Investing.com -- Shares in 888 Holdings (LON:888) sank to their biggest intraday loss since 2010 after the gambling company closed down VIP accounts in the Middle East over compliance breaches and announced that its chief executive officer was stepping down.
In a statement on Monday, the group said that best practices had not been followed regarding its VIP customers in the Middle East region. It added these accounts have been suspended, effective immediately, while further internal investigations are underway.
The group estimated that total revenues will take a negative hit of less than 3% should the accounts remain shuttered.
Meanwhile, 888 said in a separate statement that CEO Itai Pazner will be leaving immediately after four years in the role and over two decades at the company. Lord Jonathan Mendelsohn is assuming the position of executive chairman on an interim basis as the firm searches for Pazner's permanent replacement, according to 888.
It is the latest executive-level shake-up for the group after finance chief Yariv Dafna announced earlier this month that he would also be departing. 888 said in an update on Monday that Dafna will stay in the post until the end of 2023 rather than stepping down on March 31 as was initially announced.
"The Board and I take the Group's compliance responsibilities incredibly seriously," said Lord Mendelsohn in a statement. "When we were alerted to issues with some of 888's VIP customers, the Board took decisive actions. We will be uncompromising in our approach to compliance as we build a strong and sustainable business."
The announcements come as 888 is striving to lower a massive £1.6 billion (£1 = $1.2399) in debt it took on to help finance the acquisition of William Hill's business outside of the U.S. last July.
In November, 888 outlined plans to lower the debt pile through disciplined capital allocation. But it admitted that it remains exposed to elevated borrowing costs, with 64% of its total net debt at the end of September pegged to floating rates.
Peel Hunt analysts previously noted the William Hill deal has saddled 888 with "too much debt at too high a price."
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