Scranton, an unknown investment company under Dutch law, has become the Achilles’ heel of the Grifols group in recent days, following the report by the vulture fund Gotham City Research which accused it of falsifying accounts and assured that there are operations irregularities between the two signatures. Scranton, 20% controlled by the brothers Víctor, Raimon and Albert Grifols Roura, has 22 investors and controls 7.49% of the capital of the pharmaceutical company.
“We were born to help Grifols where the company couldn’t reach,” says one of its shareholders, who asked not to be identified. Scranton thus “accompanied” the pharmaceutical company in various operations, purchasing part of the assets or in sale & leaseback operations, and therefore taking on part of the debt, with contracts that guaranteed the pharmaceutical company the possibility of repurchasing the assets at favorable terms, which he generally exercised when his financial conditions improved.
Scraton was born in 1999 and grew up in the shadow of Grifols
Scranton was born in 1999, when the American company Alpha Therapeutics, which held 50% of the capital of Grifols, decided to sell this share. To avoid the sale, the Spanish shareholders had to purchase the shares held by Alpha. So the Grifols brothers and around twenty managers, family and friends, such as Tomàs Dagà, founder of the law firm Osborne Clarke, join forces with the investment bank William Blair and create Scranton. With very little capital (600,000 euros) they purchased 16% of the shares, with the debt guaranteed by the securities themselves, while MGPE, manager of Deutsche Bank, purchased the remaining 34% controlled by Alpha. Spanish investors later bought William Blair’s stake, while Deutsche Bank sold its shares in the 2006 IPO, leaving the Scranton family and investors, as the group’s only permanent shareholders, in control of around 30%. of the capital and 40% of the capital. voting rights.
Grifols also turned to Scranton to finance the purchase of Talecris, an American company for which it paid 2.8 billion euros in 2011. It thus sold the offices, warehouses and plant in Clayton (United States) to this investment holding company in a sale & leaseback transaction for 232 million euros. Grifols was left with a repurchase option, which it exercised on all the properties except the offices of the Sant Cugat del Vallés headquarters: a building for which Scranton paid 48 million euros, with a long-term rental contract that is updated with the CPI, which generates an income of 6.2 million euros per year.
Scranton was again the protagonist in 2018, when two of the few independent companies operating plasma collection centers in Europe and the United States were put up for sale, and Grifols decided to buy them even if it had to refinance 5.3 billion euros with the bank. of debt, to become a world leader in donation centers.
Grifols thus purchased three companies that own 59 centers: BPC (Biotest) and Haema Germany and Hungary, for 469 million euros, and months later sold them to Scranton for the same price, paying them an irrevocable purchase option to repurchase them for the same price at any time and manage them for 30 years. It also gave Scranton a “seller loan,” which today stands at 98 million euros, at the request of Bank of America, the entity that lent Scranton the funds needed to buy those companies.
With 877 million in bank debt it financed illiquid investments in venture capital and real estate
Grifols attempted a similar asset and debt outsourcing operation, but on a larger scale, in 2021 with GIC, Singapore’s sovereign wealth fund, to which it sold a minority stake for 1 billion dollars (840 million euros). of the American subsidiary Biomat. an option to buy it back. Auditor KPMG, however, did not approve this transaction and forced the accounts to be recast so that GIC’s investment counted as debt. Grifols’ financial creditor entities have committed not to include it in the debt commitments or covenants agreed in 2019, as explained by the financial director, Alfredo Arroyo.
Since 1999, Scranton has grown in the shadow of Grifols, driven by the growth of the group, which from the 211 million euros invoiced then rose to 6,064 million in 2022. And thanks to the dividend contributed by the pharmaceutical company, which in 2020 reached 19 million euros and, with the rental of the headquarters and plasma centers, it managed to become one of the most important family offices in Catalonia.
Excess debt and rising rates
According to Scranton’s 2022 accounts, verified by the Dutch company PKF Wallast, to which La Vanguardia had access, the group had assets of 1,232 million euros, but its purchase was financed mainly with debt: 877 million euros owed on the bench.
The holding company has concentrated its investments on real estate development and venture capital (investments in emerging companies or in restructuring): activities that initially consume capital – which the holding company provides by granting loans to its subsidiaries – but do not generate income. From 2021, therefore, the rise in interest rates and the suspension of Grifols’ dividend have put its financial structure to the test: in 2022 it had an operating profit of 26 million and paid 34 million in interest.
CNMV requested information from the holding company to clarify the relationship with the pharmaceutical group
The stock market and reputation crisis caused by the Gotham accusations comes at a difficult time for Scranton, forced to refinance its debt, with 388 million euros due next July to Bank of America.
According to the audit, this entity is the group’s main creditor, followed by Banco Santander (250 million) and CaixaBank (40 million). The group has mortgages on its real estate and, as a guarantee for the financing, has pledged the shares of its subsidiaries, including those of its own plasma collection centers, as well as a package of Grifols shares. In 2021 he even asked for a loan of 173 million guaranteed with shares of Deria – the investment company of the Grifols Roura brothers – to put them as collateral for a loan, which he repaid the following year.
Now the CNMV, in the investigation launched following the accusations by Gotham City Research, has also asked Scranton to provide information on the relationships it has with Grifols. Financial sources acknowledge that the regulator wants to ensure that the pharmaceutical group is not a guarantor of any of Scranton’s loans, and that in any case it would be Scranton shareholders and the founding family who would lose their shares to the creditor bank in the in case the investment holding company had liquidity problems.
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2024-01-21 05:00:00
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