GFL Environmental Inc. fired back at Spruce Point Capital Management on August 18, 2020, after the New York-based investment management company issued a report claiming GFL executives have ties to organized crime and the company’s shares “face 100% downside risk”.
In a statement, GFL said: “The report contains numerous inaccuracies and mischaracterizations, which GFL believes are solely intended to benefit Spruce Point, who has disclosed that it stands to profit significantly in the event that the stock price of GFL declines.”
“We are very disappointed by the baseless report put out today by Spruce Point Capital,” said Dino Chiesa, lead independent director of the board of GFL.
“Spruce Point has never engaged with the company and the report is without merit. We have the support of our shareholders and the utmost confidence in management, who have held themselves to the highest ethical standards. We continue to believe in the strategy of the business and its focus on creating long-term shareholder value.”
In the report, Spruce Point claims GFL CEO Patrick Dovigi “has obfuscated connections to what some observers have dubbed ‘organized crime’ – if true, making the stock uninvestable to institutional shareholders and putting its two deals to acquire Waste Management assets and WCA Waste at risk…”
As well, Spruce point said it believes “GFL’s leverage is understated by aggressive reporting of revenue and EBITDA, and free cash flow burn is understated by ~60%; this is evidenced by financial restatements without explanation, and by minimizing a material weaknesses of financial controls. We believe GFL’s debt is understated by at least C$460m.”