NEPI Rockcastle calls for Viceroy probe


NEPI Rockcastle calls for Viceroy probe

Published Date: 2018-11-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

NEPI Rockcastle calls for Viceroy probe

The company has challenged Viceroy to declare any trading positions they may have had in NEPI Rockcastle at the time the report was issued.

NEPI Rockcastle has called for regulators including the Financial Sector Conduct Authority and overseas regulators to probe whether Viceroy Research has operated outside of market conduct and market abuse laws. That's after the activist short-seller published a report that sent shares in the Central and Eastern European property investor as much as 16% lower on Wednesday. NEPI Rockcastle says it's clear that the issuance of the report sought to "materially impact NEPI Rockcastle and its stakeholders".

Hitting back at Viceroy yesterday, the company slammed the report, saying it contained material errors and built on incorrect assumptions. It said the report, which was prepared over six months with no request for information from NEPI Rockcastle made unsubstantiated claims and was grossly misleading.

The Viceroy report, entitled Horsing around in the Stable, accused the group of fraud and manipulation of its accounts. Viceroy said its investigations had uncovered numerous inconsistencies within the group's financial reporting and "major links to an established financial fraud". It claimed the group was fundamentally overpriced when compared with peers, even without taking the inconsistencies into account.

Viceroy said NEPI's merger Rockcastle last year was immediately followed by a massive write-down of subsidiary loans reflecting uncollectible debt from special-purpose vehicles.

NEPI Rockcastle said the transaction was an all-share merger of two listed companies, based on a share swap ratio which reflected the fact that the market priced the shares of both companies at similar premiums to net asset value. It said NEPI shareholders benefitted from an uplift in net asset value and earnings per share immediately after the merger.

The company challenged Viceroy and its associates to declare any trading positions they may have had in NEPI Rockcastle at the time the report was issued.

Its shares recovered 12% yesterday to close at R110.76. They're down 48% this year.

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