Indivior (IDV)

[Bouleversee]

Indivior faces fraud charge and $3bn fine

Various stories about this including on Citywire and SeekingAlpha. Price plummeted 78%. They are going to fight it. Reckitts may also be involved. Glad I only have the spin-off holding.

Moderator Message:
Edited into correct format for board. -- MDW1954

[Breelander]

Various stories about this... They are going to fight it...

RNS from Indivior...

...The allegations are based on actions that occurred almost exclusively prior to Indivior becoming an independent company in its demerger from Reckitt Benckiser Group plc at the end of 2014. The Company believes the allegations are unsupported by the facts and the law. Key allegations have been contradicted by the U.S. government's scientific agencies, the Food and Drug Administration and the Centers for Disease Control....

https://www.investegate.co.uk/indivior- ... 00046881V/


Further statements here on their website...

We are extremely disappointed in this action by the Justice Department, which is wholly unsupported by either the facts or the law. Key allegations made by the Justice Department are contradicted by the government’s own scientific agencies, they are almost exclusively based on years-old events from before Indivior became an independent company in 2014, and they are wrong.

http://www.indivior.com/commitment/

...Reckitts may also be involved...

RNS from Reckitts...

This indictment is not against RB Group Plc or any other group company and we currently have no additional or new information in respect of this matter, apart from what has been publicly issued by the Department of Justice and Indivior Plc...

https://www.investegate.co.uk/reckitt-b ... 37567691V/

[MDS1951]

I was very interested in the charges against Invidior, and their knock-on effect on Reckitts because I had 68 shares in the latter this morning, so I read their announcement today and noted this bit:-

Investors are referred to previous public statements including Note 19 in our 2018 Annual Report in which we state that at 31 December 2018 the company was recognising a provision (denominated in dollars) of $400m or £313m.

The information contained in Note 19 of our annual report remains our most up to date statement.

What does this Note 19 contain, thought I, and discovered this:-

The Group remains involved in ongoing investigations by the DoJ and the US Federal Trade Commission and related litigation proceedings in the US arising from certain matters relating to the RB Pharmaceuticals (“RBP”) business prior to its demerger in December 2014 to form Indivior PLC, and may incur liabilities in relation to such matters. These investigations and related proceedings are continuing and the Group has been in discussions with the DoJ. At 31 December 2018, the Company was recognising a provision (denominated in US dollars) of $400 million (2017: $400 million) or £313 million (2017: £296 million). The Group remains committed to ensuring these issues are concluded or resolved satisfactorily but we cannot predict with any certainty whether we will be able to reach any agreement with the DoJ or other parties who are involved in any other investigation or related proceedings. The final cost for the Group may be substantially higher than this provision.

it was the bit in bold that alarmed me. Reckitts went down by 6.5% today and I had been a little twitchy that the company was beginning to run out of steam and that management might be starting to lose the plot - just a feeling in my bones. I think that when the Americans realise that Invidior hasn't a hope of paying that $3 billion if they win their case against it, they will come after Reckitts because most of what they are interested in happened before Invidior was spun out of Reckitts.

I was lucky enough to buy my Reckitts shares when they were just over half the price that they are now and just about qualified for inclusion in my HYP so today I decided to sell them all at a good profit and buy something that might not be so exciting growth-wise but be safe-ish income-wise and shouldn't have a company-endangering event either - so I put all the money into Murray International. I'm at the stage where I'd rather not make my own decisions about which new share to buy or top-up but give the task to an alleged expert instead. And the annual dividend will be a bit more than from my Reckitt shares as well, so it improves my dividend income overall.

I felt much better after I had completed the transactions!

MDS1951

[Bouleversee]

Oh dear! I have nearly 600 shares in Reckitt and I was forgetting I inherited my husband's Indivior as well. What a pity I don't have time to plough through all the lengthy annual reports for all my holdings which I usually find illegible on my computer anyway . I do read The Times and weekend FT and Sunday Times and try to look on here every day but I don't recall any mention of Note 19, which would have alarmed me. I should have thought the press would have been on to it but maybe I missed it. No wonder the share price is quite a long way off its high. It rather looks as though the ball will land in their court and their provision won't go very far towards covering the fine mentioned today. No idea what to do now. What would such a fine do to their balance sheet?

[MDS1951]

I can't help you with what to do next, Bouleversee, except to post the link to the RB Annual Report for 2018. It is in PDF format, so I hope you can read it on your PC. The balance sheet is on Page 139.

https://www.rb.com/media/4356/rb-ar2018.pdf

Total assets of RB were £37,650 million and of that £30,278 million were goodwill and other intangible assets. Goodwill itself was just under £12 billion and the rest was what they thought various of their brands like Dettol, Cillit Bang, Harpic etc are worth.

Total liabilities were £22,861 million, of which £2.2 billion were short-term borrowings and £9.7 billion were long-term borrowings.

Net assets were £14.8 billion.

I suppose one could say that IF RB were hit with a fine of, say, $3 billion which would be approximately £2.3 billion it would pull down their net assets to around £12.5 billion if they funded such a fine by borrowing and that RB can take the hit (if it comes) and move on. We don't know yet whether the US authorities will pursue RB if Invidior is made liable for this fine and can't pay up, so a lot of folk might well think I have jumped the gun by selling my RB shares. As I said in my original post, I was beginning to feel iffy (for no really logical reason) about my RB shares and the news about Invidior and my fears about what that might do to RB prompted me to take my profits, move the money to somewhere that I think is safe-ish with a somewhat higher yield, and feel better.

So that is all I can say about it. I'm certainly not giving you any advice, because I could easily have got it all wrong.

Best of luck!

MDS1951

[Bouleversee]

Thanks,MDS. I have only a laptop and the text (which appears to be just a photocopy of the AR) is very blurred and too small to be legible; I tried to read it last night but gave up.

I will mull things over and see which way the wind blows. Whatever I do will be wrong, no doubt. However, the sun is shining and there is much to do in the garden so that's what I'm concentrating on today.

It never ceases to amaze me how much the bosses get paid for getting the company and the shareholders into such pickles.

[PinkDalek]

Thanks,MDS. I have only a laptop and the text (which appears to be just a photocopy of the AR) is very blurred and too small to be legible; I tried to read it last night but gave up. ...

You may find the documents available here https://www.rb.com/investors/annual-report-2018/ slightly easier on the eye when opened individually.

Bottom left you have these options (excluding all the blurb, the Financial Statements start on page 124 of that download) :

Downloads

Full annual report 2018
Strategic Report
Chairman's statement
Chief Executive's statement
Corporate governance
Financial statements

[monabri]

$3billion fine ..the opener in the negotiations....so , what might it really come down to? $2 billion?

Indv have a provision of $438m

(RB have a similar provision..$400m they said.)

RB's annual dividend is circa £1145m or approx $1.5billion USD.

I assume the fine will be paid over n years.

So, maybe RB will cancel the divi for 1 year worst case - or reduce it for 2 years ?

All pure guessing !

[Bouleversee]

Thanks,MDS. I have only a laptop and the text (which appears to be just a photocopy of the AR) is very blurred and too small to be legible; I tried to read it last night but gave up. ...

You may find the documents available here https://www.rb.com/investors/annual-report-2018/ slightly easier on the eye when opened individually.

Bottom left you have these options (excluding all the blurb, the Financial Statements start on page 124 of that download) :

Downloads

Full annual report 2018
Strategic Report
Chairman's statement
Chief Executive's statement
Corporate governance
Financial statements

Many thanks, PD. Much better. All I need now is time to read it all.

[Bouleversee]

$3billion fine ..the opener in the negotiations....so , what might it really come down to? $2 billion?

Indv have a provision of $438m

(I assume RB have a similar provision.)

RB's annual dividend is circa £1145m or approx $1.5billion USD.

I assume the fine will be paid over n years.

So, maybe RB will cancel the divi for 1 year worst case - or reduce it for 2 years ?

All pure guessing !

What I can't understand is that nobody seems to know whether RB or Indivior will get stuck with the fine, whatever it is. However, I suppose that if the alleged dodgy behaviour started when it was part of RB and was continued after the demerger they could both be held liable. Hope it's not $3bn each.