Investing.com - Grifols (BME:GRLS) starts Thursday's session lower. So far this week, the pharmaceutical company has lost 5%, after suffering a plunge of almost 40% the previous week following the Gotham City Research report that suggested manipulation of accounts.
Gotham's hedge fund closed its short positions after the collapse of Grifols, making a profit of 20 million. The Spanish company defended itself by arguing interests behind Gotham's report and announced legal action.
Yesterday, Grifols fell again after it was announced that the Millennium International Management fund had taken a short position with a 0.53% stake in the pharmaceutical company.
The ECB enters the scene
The latest news is that the European Central Bank (ECB) is investigating the position of banks in relation to their exposure to Grifols.
The body has asked several lenders to detail their exposure to Grifols and its related entities.
"The pharmaceutical company has net debts of 9.5 billion euros, and the ECB is seeking clarity on lenders' exposure. Grifols' lenders include Santander (BME:SAN), BNP Paribas (EPA:BNPP), Bank of America (NYSE:BAC), BBVA (BME:BBVA) and CaixaBank (BME:CABK)," explains Sergio Avila, senior market analyst at IG.
Grifols is in the process of implementing additional strategies to reduce its debt, planning to raise 600 million by consolidating its shares. "The company is planning actions to reduce its liabilities, focusing its efforts on two key moves in the coming months. First, the company is looking to simplify its structure and unify the A and B shares once the value of the securities affected by the recent Gotham City indictments recovers," adds Ávila.
"In addition, Grifols is also considering simplifying its structure through divestments, such as the recent sale of Shanghai Raas. Although the possibility of combining shares has been mentioned since last year, the company's current momentum makes these operations less attractive," says the IG senior analyst.
"Despite the challenges, Grifols is confident in its plan to meet future writedowns, backed by the sale of Shanghai Raas, cash funds and expected savings from cost-cutting measures. However, the company faces uncertainties following the Gotham City allegations, which call into question its financial situation," says Ávila.
For Ávila, Grifols' strategy is a positive move. "Debt is what all investors are looking at at the moment, so anything that moves towards debt reduction is good, even though the stock is now trending downwards," he concludes.
Translated from Spanish using DeepL.
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