DQ Entertainment plunges after threats from broker and solicitors

4th Feb 2016 10:19

(ShareCast News) - Things are getting more serious at cartoon animation and events business DQ Entertainment, which fell to an all-time low after being threatened by its AIM nominated adviser, which said it could resign over the potential appointment of two directors.Allenby Capital, the company's broker and official 'Nomad' that all companies on AIM require, said if Anil Chintapalli and Suresh Chitturi are appointed it will resign immediately as due diligence on the pair has not been completed.Allenby said it has not reached a satisfactory conclusion to its due diligence for the appointment of one of the pair and that due diligence on the other is unlikely to be progressed until the appointment of a new Nomad.DQ also received a letter from solicitors acting on behalf of a shareholder consortium formed of Chintapalli, Platinum Consulting Group and Corporate Computer Services, who collectively own 51.78% of DQE's shares and who are backing the installation of Chintapalli and Chitturi, as well as threatening legal action over certain warrants issued earlier this week.On Monday, DQ issued the warrants to OL Master, an existing bondholder, which gives the Hong Kong private credit fund the right to subscribe for 16.9m shares in the company at 5.375p a share.This consortium's solicitors have raised questions about the validity of the company's 28 September annual general meeting and the resolutions passed then, together with management's authority to issue the warrants announced on Monday and allot shares pursuant to their exercise.DQE, which is taking legal advice on this matter, said it believed that "any legal proceedings are unfounded and will vigorously defend them".The company is in conversation with several potential replacement Nomads and would have to appoint a new broker by 23 February in order to avoid suspension of its sharesShares in DQ fell as much as 72% to 1.25p on Thursday, before recovering slightly as the day wore on.