Gotham warns of operations between Grifols and Scranton subsidiaries and questions their "ethical conduct"

The bearish fund warns that the Spanish firm, which has hit its lowest on the stock market since 2012, discloses "selective" information to analysts.

Gotham warns of operations between Grifols and Scranton subsidiaries and questions their "ethical conduct"

The bearish fund warns that the Spanish firm, which has hit its lowest on the stock market since 2012, discloses "selective" information to analysts

Gotham City Research has warned this Wednesday that Haema and BPC, Grifols subsidiaries, would have a financing agreement with the Scranton family office, which appears in its accounts in 'other assets from related-party operations', which has led, once again , to the bearish fund to question the blood products firm's commitment "to transparency, integrity and ethical conduct."

This has been revealed by Gotham in a new report in which it has once again attacked Grifols almost a week after presenting its annual results and awaiting the publication of its accounts audited by KPMG, whose deadline expires this Friday, December 8. March.

Specifically, according to the company's explanations to Kepler Cheveaux, as detailed by the bearish fund, the unaudited company accounts include 321 million euros as 'other financial assets with related parties', which refer to an agreement of 'cash pooling' financing that Haema and BPC have with Scranton.

"Grifols claims that the €321 million of 'other financial assets with related parties' refer to a 'cash pooling' financing agreement that Haema and BPC have with Scranton," Gotham notes in its report, in which, according to In his opinion, this is a "lending activity between Haema and BPC, and Scranton."

For this reason, Gotham explains in its report, to which Europa Press has had access, that Grifols could have sent funds to Scranton through a loan as part of a 'cash pooling' financing agreement, without the intention of repaying the loan. cash.

"Based on our reading, it appears that real-money cash loans made with Grifols shareholder funds are intended to be amortized in exchange for declared dividends, which are accounting items of the book value of equity. If we are correct "This is about canceling cash loans in exchange for nothing in cash! Is it money in exchange for nothing?" Gotham denounces.

In this context, Gotham accuses Grifols of providing "selective" information to analysts and emphasizes that the commitment to "transparency, integrity and ethical conduct is, at best, a work in progress."

"We believe that Grifols should talk less about its high standards until it acts in a manner consistent with its publicly stated intentions," Gotham says in the report called 'How an advance payment turns into a loan. Part 1 (Haema AG)', which suggests that it still has more information to publish about Grifols.

Gotham once again launches another set of seven questions to the blood products company, among them why Grifols selectively reveals the existence of this 'cash pool financing agreement' to banking analysts, without publicly disclosing these details and why it has lent 318 million euros of Grifols shareholder funds to Scranton.

Other issues center on the existence of loans to Scranton through Haema and BPC, as well as the recent revelation of loans to the former president of Grifols.

"Given that Haema and BPC have valuable claims against Scranton that will be written off if dividends are declared, but Grifols controls Haema and BPC, will Grifols use its control of Haema and BPC to cancel and not declare dividends to Scranton in order to preserve these assets? for Grifols shareholders?" Gotham asks in its report.


Likewise, Gotham considers that the Kepler Cheveaux report revealed new data, wondering if Grifols provided information "selectively" to its analysts.

"They provided, after our second report published on February 20, new and clarifying information to the market, so it seems that Grifols disclosed it, selectively, only to these analysts and not to the general public, taking into account that many of them may not have access to these analyst notes," he points out.


The bearish fund has considered that Grifols' words towards them have been "very critical" of his research and, often, "loaded with offensive and false comments" about Gotham and his work, although he has stated that "the actions -- that the company is taking--"appear to support many of the key concerns raised.

"As they say, 'watch what they do, not what they say,'" explains Gotham, exemplifying that a key point of their research has been what they consider "corporate governance problems and the existing unsustainable conflicts of interest, in which The CEO, Thomas Glanzmann, members of his family and other insiders, such as Tomas Daga, are involved.

"The board of directors has undertaken no more than three major changes in its corporate governance since we published our first research report," said the bearish fund, which detailed that Grifols "has replaced the CEO, excluded the members of the board's strategic decisions and has seen family members resign from their executive positions.

Specifically, Nacho Abia will become the new CEO of Grifols, and Raimon Grifols, Víctor Grifols Deu and Albert Grifols Coma-Cros end their executive stage at the blood products firm.

All in all, Grifols shares plummeted 11.71% around 12:00 p.m., with its shares trading at 6.864 euros per share, marking their lowest since February 2012.