Grifols closed 2023 with a bang. The announcement of disinvestment ‘in extremis’ in Shanghai Raas for 1.6 billion euros – which he had entered into only four years before – seemed to put an end to the uncertainty about his financial situation. Even the Moody’ agency welcomed the decision of the company’s top management on January 4 because it was “positive news for its credit profile.” Just five days later, the Gotham report raised a series of uncomfortable questions that allowed doubt to spread.
In those first days of the crisis, the pharmaceutical company achieved the almost unanimous support of the brokers and investment banks that follow the action. Two months later, half a dozen analysts have changed their minds and Moody’s has quarantined its rating, the passport to access the debt markets at a critical moment when Grifols was preparing to refinance liabilities worth almost 3 billion. both bonds and bank credit lines, which culminate throughout 2025.
The restructuring of the first line of command with the departure of Raimon Grifols Roura and Víctor Grifols Deu, or the abandonment of the executive functions of Thomas Glanzmann from 2025 have partly justified the darts that Gotham launched about corporate governance of the group. The Financing of Grifols to Its Shareholder Scranton Enterprises, the Cross Transactions with Consa Sociedad, the Weakness of the Unaudited Results That You See and the Confusing Forecasts for 2024 That It Had to Clarify On Friday Have Become a Straw Has Broken the Glass of Patience analysts, bondholders and shareholders.
The collapse of the share price (-40% since they presented their accounts) has begun to be followed by bond shares, which had remained unrelated despite the crisis. The drop in price has been the largest in more than three years in the price of any of them. Grifols has issued five series with maturities between 2025 and 2028 for an import of 4,500 million euros, which pay coupons of 1.62% to 4.75% and whose cost in the form of interest is estimated at 150 million euros annually. But it is debt from the era of zero rates that in the current scenario will see its cost rise drastically, according to financial sources.
Aware of the attention generated by the presentation, Grifols’ CFO, Alfredo Arroyo, predicted that the company’s free cash flow (FCF) will reach €500 million in 2024, however, the figure generated confusion among analysts. . that participation in the conference is prohibited from questions from the press. Several repeated the same question about that metric. The company had to clarify it the next day, emphasizing that, taking into account extraordinary impacts, cash flow would be reduced to barely 5 million this year.
Álvaro Lenze, an analyst at Alantra, said he was unable to understand the company’s free cash flow guidance, adding that its explanations left him with more questions than he initially had, according to a report cited by Bloomberg, which he noted “is missing of communication and transparency” and warned that “there could be additional hidden problems, which would lead us to lose trust. Juan Ros (Oddo), Álvaro Aríztegui (Renta 4), Pablo de Rentería (Kepler), Fernando Gil (Bestinver) have reduced the recommendation to their clients about Grifols to ‘sell’ or ‘neutral’ from ‘buy’ after seeing their accounts.
Bondholders have also started selling. Blackrock holds about €200 million of the company’s debt through some of its funds. Octagon (188 million), JPMorgan (98 million), Nordea (90 million) and Allianz (80 million) are on the list of main creditors of the bonds. Santander, Caixabank, BBVA and Bank of America are among the entities with the greatest exposure to the bank debt carried by the pharmaceutical company. In total, liabilities amount to over 11,000 million euros, although if available liquidity and leases are discounted (IFRS 16), the figure is reduced to 9,420 million.
Over the last few years, movements in stocks have seen the return of bearish hedge funds such as Millennium Capital (-0.62% of capital), Qube Research & Technology (-1.57%) and the return of the giant Ako Capital (-0.62). %), which had been betting against Grifols for more than a year before Gotham arrived. There have also been new sales of shares of the Capital Group funds, the largest financial shareholder not linked to the Grifols family, but there has also been a decrease in the position of Santander, which had around 4% of the shares. . class B that Grifols has issued.
