A little over four months ago EiDF appeared to be riding a wave of success. The Galician company, specializing in photovoltaic installations for industry, had enjoyed rapid growth within its first year of expansion. Listed on BME Growth, a market for growing SMEs, its market capitalization neared 1.7 billion euros, placing it among notable Ibex constituents and close to the value of established firms such as Indra. The story stemmed from Barro, a small town in Pontevedra where the company originated and where its founder, president and CEO, Fernando Romero, once lived. Then, on April 14, everything shifted. The CNMV suspended the company’s listing after disagreements with the newly appointed auditor PwC, making it impossible to complete the accounts within the statutory deadline.
With the accounts subsequently refiled, EiDF’s value tumbled below 230 million euros. Small shareholders, constituting about 13 percent of the capital, endured losses exceeding 85 percent of their investments. Romero, who controlled roughly 72 percent of the shares, saw his personal assets swing by more than a billion euros. Alejandro Alorda, a member of the founding family behind Muebles Kettal and an important investor in EiDF through Crowd Investments owning about 7.6 percent, faced a dramatic hit: just before the IPO suspension, his stake was worth 131 million; it has since fallen to around 17 million.
The situation intensified as EiDF entered a tense dispute with its controller PwC and speaking up against Deloitte, the firm commissioned to prepare the forensic report, and especially with the CNMV. After a forceful communications phase in mid-August, the company publicly stated that it would not concede to the CNMV’s demands.
This paints a challenging picture for EiDF as it contends with the prospect of moving from a Growth phase to Continuity at a moment when it appeared to be breaking into the Ibex’s big leagues.
Omissions and distortions
Questions arise about potential omissions amid a legal backdrop. The CNMV flagged what it described as significant omissions, pointing to Deloitte’s forensic report. It asked whether the company left out or altered critical information and whether internal resources were manipulated to create a misleading impression. Was the organization, led by its founder, growing at a breakneck pace while tight controls kept it within a narrow margin of oversight?
PwC, the recently contracted auditor, declined to sign the accounts after identifying serious inconsistencies. The matter escalated to the CNMV suspending EiDF’s listing and commissioning a third party, Deloitte, to conduct a forensic review to gauge the impact of these discrepancies. PwC later issued an audit report noting substantial weaknesses in governance and internal controls and warned that the group carried a negative working capital profile that could threaten its ability to continue as a going concern.
EiDF contends that the forensic assessment includes a sum of around two million euros, much of which is recorded in the company’s accounts. It argues that this amount is negligible relative to the group’s 2022 turnover. PwC’s signed figures show a consolidated revenue of 329 million euros in 2022, a 371 percent increase from 2021, and an adjusted consolidated EBITDA of 10.6 million, more than double the figure for 2021.
CNMV’s intervention
On August 16, the CNMV requested that EiDF share a draft communication detailing Deloitte’s forensic findings and any privileged information. EiDF submitted a response the following day, but the CNMV deemed the publication incomplete and marked by important omissions. In a strongly worded statement on August 21, the CNMV said the release did not meet regulatory requirements and contained essential gaps. The commission highlighted that Deloitte’s report contained material implications for EiDF shareholders and drew attention to matters such as potential document falsifications and weaknesses in internal controls. The CNMV urged EiDF to publish the issues found in the forensic report without embellishment or commentary from the company. In addition, the statement identified that the founder, chairman and CEO participated in most major decisions, and linked him to debts and allegations involving document falsification and questionable invoices or payments that lacked justification. The CNMV also signaled that a new CEO would be appointed.
Company in absentia
EiDF’s response was notably abrupt. The company formally informed the CNMV that it would not publish the comprehensive measures outlined in the CNMV request. The move was described as a counterstatement, effectively signaling a broader impasse between the securities watchdog and EiDF. The CNMV noted it would monitor the situation closely, while EiDF countered that the legal conclusions drawn in Deloitte’s report would be reviewed by a prestigious firm for liability implications.
As the dispute continues, the future of EiDF and its shareholders remains uncertain. The CNMV holds the decisive position, with the possibility of reshaping the company’s trajectory from a celebrated rise to a more precarious standing.