©Reuters
Investing.com — Madrid listed stocks grifolus (BME:) Shares plunged on Tuesday after UK-based short seller Gotham City Research released a report questioning the validity of the Spanish healthcare company’s financial numbers.
Gotham City said in the report that Grifols had “manipulated” its reported debt and earnings before interest, taxes, depreciation, and amortization (EBITDA) to “artificially reduce” its reported leverage. He claimed that there was. Gotham City argued that the group’s leverage of 6x EBITDA should be closer to 10x to 13x.
“If our estimates of Grifoll’s true influence are correct, [Grifols] Gotham City said, “The cost of financing will be significantly higher. Therefore, we believe the stock is non-investable, and likely zero.”
The allegations stem from the sale of two businesses, BPC Plasma and Haema, to family car company Scranton Enterprises. According to Gotham City, both Grifols and Scranton have fully integrated BPC and Haema into their financial statements, a practice the companies claim is “grossly deceptive and inaccurate.”
Grifols stock temporarily lost nearly $3.83 billion in market capitalization following the fraud allegations.
Nasdaq-listed Grifols, which makes plasma-based medicines, told Spanish market regulator CNMV that the Gotham City report amounted to “misinformation and speculation.”
“As a company committed to transparency, integrity and ethical conduct, we categorically deny and reject any allegations of fraudulent accounting or reporting practices in our consolidated financial statements,” Grifols said.
Gotham City describes itself on its website as a group “focused on due diligence-based investing,” adding that it may have long or short stock positions in the companies it targets.
Founded in Barcelona in 1909, Grifols has grown into an international company with operations in more than 30 countries and more than 24,000 employees.