Cobham faces insider information probe ahead of £500m rights issue

Troubled defence firm Cobham is being investigated by the Financial Conduct Authority (FCA) watchdog in connection with its handling of inside information ahead of a £500m ($630m) rights issue.

The aerospace and defence group launched the emergency rights issue last April to shore up its balance sheet after a costly move to gain more commercial customers led to a profit warning.

It said it was "informed orally" that the FCA's would enforcement division would look into the firm.

It added the probe would focus on the "company's handling of inside information prior to its trading update and announcement of its intention to undertake the 2016 Rights Issue on 26 April 2016."

Cobham said it was "cooperating fully with the FCA and will update the market on the outcome in due course".

The group announced plans for another £500m rights issue at the start of this month, which it said was on track.

Also, this month it announced a sharply higher pre-tax loss £847.9m for last year, compared with £39.8m for 2015, and warned there would be no dividend this year.

Analysts have blamed Cobham's troubles on a costly diversification strategy pursued under its former management, designed to reduce reliance on a shrinking defence market.