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Grifols (NASDAQ:GRFS) shares plunged in European trading on Tuesday after the hedge fund Gotham City Research alleged that the Spanish plasma therapeutics company "manipulated" its debt and EBITDA figures to "artificially" lower its leverage.
While the Barcelona-based firm's reported leverage is 6x, Gotham City Research claims it should be closer to 10x–13x.
"Should our estimate of the Grifols' true leverage be correct, GRF will face notably higher financing costs," it said. As a result, it believes the company shares "are uninvestable, likely zero."
In a filing to the stock market regulator, Grifols (GRFS) denied the allegations, noting that the Gotham City report was "false information" and "speculation."
The company added that it has disclosed all the information cited related to the report "with the highest level of integrity and transparency."
According to Reuters, Spain's market regulator, the CNMV, has launched an investigation into a Gotham City report. The agency said discussions are underway with Grifols (GRFS) to obtain the necessary data.
The allegations surfaced days after the company agreed to sell ~20% of its equity stake in Shanghai RAAS to Haier Group for about $1.8B.