Grifols has not convinced the market after the meeting that its main executives held this Thursday with financial analysts to defend themselves from the Gotham City Research report, in which the fund denounced the accounting practices of the Catalan group to allegedly disguise its accounts and hide its high debt. The president of Grifols, Thomas Glanzmann, has rejected all the accusations but without providing any relevant evidence to support this denial. This is what the market has understood at least, and as soon as the conference ended, it harshly punished the price that had opened with slight increases at the stock market opening. At the close of the session this Tuesday, however, Grifols shares have fallen 16.17%, to 9.90 euros.
Glanzmann has revealed that the National Securities Market Commission (CNMV) has given Grifols a period of 10 calendar days to clarify a series of issues regarding its financial status following the Gotham report. Yesterday, the market supervisor sent a request to the company in which a series of issues were raised that Grifols did not want to detail. “We will respond as soon as possible,” said the executive, who has held the presidency of the pharmaceutical company for a year. The president of the CNMV, Rodrigo Buenaventura, already announced last Tuesday, as soon as the bearish fund report was known, that the organization was going to “exercise its powers to clarify the situation.” “It makes no sense to question the quality of Grifols' audited accounts or ignore the information that was published this morning, we are going to incorporate it into our processes. “We have contacted the company and we will contact you in the coming days to collect additional information with the aim of clarifying this situation,” he then indicated.
Scranton's role
The ultimatum given by the CNMV has been one of the few relevant data that Glanzmann has provided in his meeting with analysts. Regarding the main complaint launched by Gotham, that Grifols has used the investment company Scranton Enterprise, based in the Netherlands, to hide its debt, Glanzmann has specified that this company is not merely a family office of the Grifols as the fund maintains, since “there are 22 investors and only three are members of the Grifols family, who own 20% of the company.” The other link that it admits is that Scranton is the landlord to which the pharmaceutical company pays rent for its headquarters in Sant Cugat del Vallés (Barcelona). In 2018, the Catalan pharmaceutical company sold two blood plasma center companies (Haema and BPC) to Scranton that it had purchased just a few months before, but has continued to consolidate both companies in its accounts in order to increase its gross profit (ebitda) and reduce its leverage ratio.
Despite everything, Grifols executives have indicated to analysts that they have no plans to modify their relationship with Scranton or to exercise the buyback option on BPC and Haema that they claim to have. The financial manager, Alfredo Arroyo, has estimated the contribution to the EBITDA of the two companies questioned by Gotham at 30 million, 2% of the total. He has also not given details about his plans to refinance his high debt, of more than 8,000 million, apart from dedicating to reducing it the 1,600 million that he will receive from the sale to Haier of 20% of Shaghai Raas. Regarding this operation, they have indicated that “it is not at risk” and they hope to be able to close the transaction, as planned, in the first part of 2024.
Grifols managers have taken advantage of the meeting with analysts to once again attack Gotham, accusing it of using information in a biased or false manner for the sole purpose of making money. An accusation that has not deterred the fund that, through the X network, has once again denounced that both Grifols and Scranton continue to consolidate BPC and Haesma in their accounts to fatten their accounts.
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