The Grifols subsidiary paid dividends of €266 million to Scranton in 2023.
The delivery of BPC to the group’s founder company was carried out through debt write-off, without the assumption of a “cash outflow”, according to last year’s accounts, which have not yet been audited. Councilor James Costos does not sign them because he was “absent” from the meeting where they were reviewed and the price dropped 10%.
One of the questions raised by the bearish investor Gotham City In his latest report criticizing Grifols was the existence of a “related party financial asset” of €321 million as at June 2023. short seller he was wondering if The recipient of this money was Scranton, a Dutch company associated with pharmaceutical company founding family and which has around 8% capital.
In its 2023 report, which has not yet been audited, Grifols shows that the asset was largely compliant agreement on “sharing the treasury” (pooling of funds) between Scranton and blood plasma collection companies BOD and Hema.
These two companies American and Germanowned by Scranton, but Grifols consolidates them by managing and there is a possibility of purchase possibility of implementation at any time.
The pharmaceutical company reports that in the second half of last year Netherlands holding received dividends from one of these companies. “BPC Plasma distributed dividends without cash outflows offsetting other non-current financial assets. The dividend corresponds to the result 4 previous exercises worth 266.4 million euros to its shareholder Scranton Plasma. This distribution had an impact against stock reserves doesn’t dominate the group,” explains Grifols.
In its 2022 accounts, the blood product manufacturer indicated that the financing agreement under which BOD and Hema shared their treasure with Scranton, interest rate 3.75% and matures in 2024. As reported today in 2023 results, said debt (or a significant portion of it) would have been canceled by payment of the above dividends.
That is, Scranton already had money – as a debt to BPC – and now it becomes his property. consequences of dividend distribution attributed to the profit of this company for the last 4 years. Grifols emphasizes in the reports that there is no cash flow for this transaction. Last year the company did not distribute dividends to its shareholders.
In turn, these dividends could affect the price of the option to repurchase shares of BPC and Haema, which Grifols sold in 2018 to Scranton for $538 million. Most of it was financed by loans Bank of Americaand the pharmaceutical company itself provided $95 million to the buyer.
The option price, as stated by Grifols in its annual report, will depend on the price paid in 2018. plus change in working capital BPC and Haema have since said that “due to the nature of the companies’ activities, this would be consistent with retained earnings.”
The BPC and Haema shares were pledged by Scranton to Bank of America, but Grifols argues that if the loan defaults, he will have time to exercise his call option and pay off debts to Wall Streetwhich is about 350 million euros.
Relationship between Grifols, Scranton, BPC and Haema found itself at the center of criticism from Gotham City Research in its reports on the company.
Although the bills are not signed KPMGAccording to the auditor of the company “Grifols”, an unconditional conclusion will be received before March 8.
James Costos, a former US ambassador to Spain and director of Grifols, does not sign the financial statements because he was “absent for personal reasons” at the meeting at which they were approved. According to the company, this administrator did not express any objection or disagreement with documentation.
Price of Gryfolov today it’s down about 10% on the stock market after the results are presented.