A little over four months ago everything was smiling at the EiDF. The Galician company, which specializes in photovoltaic installations for the industry, has seen dizzying growth in just one year. Listed on BME Growth, a market for expanding SMEs. The stock market value was around 1 billion 700 million euros., currently higher than Ibex companies like Sacyr and close to the value of companies like Indra. It was the miracle of Barro, the small town of Pontevedra where the company was born and where its founder, president and CEO Fernando Romero lived. But on April 14, everything changed. CNMV has decided to suspend the listing of the company Due to disputes arising between the company and its newly appointed auditor, PwC, which would make it impossible to sign the accounts within the relevant statutory period.
Now after listing the accounts again after publishing, EiDF is worth less than 230 million; small shareholders (13% of capital) have lost more than 80% of their investment; His top boss, Fernando Romero, who controls 72% of the stock, has seen more than 1,000 million assets fluctuate… And worst of all, EiDF is at open war with its controller PWC and Deloitte (The person hired to prepare the forensic report) and especially with CNMV, After harsh communication in mid-August, he had formally and publicly communicated that he would not meet his demands.
And that’s not good news for the EiDF, which is about to move from Growth to Continuity at its peak (we insist a little over four months ago). The beginning of Ibex. Big leagues.
Omissions and distortions
Joining a company’s lawsuit? “very relevant omissions”, As highlighted by the CNMV based on Deloitte’s forensic report? to what extent using the same resource “Created, modified or falsified documents”? Are we dealing with a company with dizzying growth, controlled down to the last detail by its founder? “Internal control weaknesses” Have they caused serious organizational, financial and commercial chaos?
PwC, an auditor recently hired by the company, refused to sign the accounts after finding serious inconsistencies in their analysis. The situation reached such a point that the CNMV suspended the listing of the firm and requested that a third party (Deloitte) be commissioned to prepare a forensic report to analyze the impact of these discrepancies. Based on this report, PwC signed the Audit Report but met the requirements. In this report, the auditor warned of “significant weaknesses in the corporate governance model and system of internal control.” It was also revealed that the group “has 20 billion 930 thousand euros (20.9 million euros) of negative working capital” and that this “could constitute” “among other issues”. Serious doubts about the group’s talent remains an ongoing concern.
According to the EiDF, the assessments in the forensic report “include an arrangement of around two million euros, most recorded in the company’s accounts” […]It is an amount that cannot reach even 1 percent of the global turnover volume in 2022”. Accounts signed by PwC show consolidated revenue of 329 million euros in 2022; this is 371% higher than in 2021 and adjusted consolidated ebitda of 10.6 million, more than double 2021.
CNMV’s fixer
On August 16, the CNMV requested the EiDF to send a draft communication outlining Deloitte’s forensic report and containing privileged information made public. The EiDF sent the message the next day, but it was unusual for the most controversial points to be spelled out. On August 21, CNMV from the General Directorate of Markets issued a statement stating that the EiDF publication did not meet the “requirements of the CNMV” and added: “The published information is incomplete and contains very important omissions.”
The CNMV’s strikingly harsh statement explained that Deloitte’s forensic report contained “evidence of great importance to EiDF shareholders” and highlighted “evidence that relates to”: possibility of forgery of documents by the company”; it also drew attention to “internal control weaknesses”. The CNMV also requested that the EiDF publish the matters contained in the forensic report “without any explanation, comment or addition from the company”. And just in case, the CNMV released in this statement the results of the forensic report, which in its opinion should be included. These include the company’s founder, chairman, and CEO, Fernando Romero, who “has been involved in almost all of the company’s decisions first hand”; They associated him with debtors and, in connection with this, “falsification of documents, as well as invoices and payments for services not provided or justified,” among other issues.
Finally, the CNMV requested the EiDF to announce that “a new CEO will be hired”.
Company in absentia
Related news
The company’s reaction was, to say the least, unheard of. The company responded very sharply, “officially reporting to the CNMV: Comprehensive formulas foreseen in the requirement submitted by the CNMV will not be published”. A full-fledged declaration of war acknowledging that the CNMV may “act as it sees fit”. Shocked by the situation, the Securities Commission says it simply “looks at everything”. EiDF added: “Legal conclusions reached in the report judicial Deloitte’s report was submitted to a prestigious firm’s opinion on whether it “will lead to a claim for liability by its authors.”
As the war rages on, the future of the company and its shareholders becomes uncertain as CNMV has the ball. It can be transformed from a miracle born in mud to a miracle with mud feet.