Boston-based American Tower has filed an 8K with the SEC disputing suggestions in a report by short-selling firm Muddy Waters Research that values the towerco’s stock at US$30.00 less than its US$74.71 share price on the NYSE.
In its report Muddy…
Boston-based American Tower has filed an 8K with the SEC disputing suggestions in a report by short-selling firm Muddy Waters Research that values the towerco’s stock at US$30.00 less than its US$74.71 share price on the NYSE.
In its report Muddy Waters, founded by Carson Block, suggested that in late 2011 American Tower only paid approximately US$300m for towers in Brazil which the towerco said cost US$585m.
“If [American Tower] is aware of this discrepancy, it would amount to fraud,” the firm said. “We have provided our research to the SEC.”
However, in its 8K American Tower has said the suggestion in the report is wrong. It said it used a combination of intercompany loans and American Tower equity to do the deal, and that Muddy Waters had only counted one of these sources. It added that it worked with one of the big four accounting firms on the transaction.
In a television interview with CNBC, American Tower CEO Jim Taiclet said the company would provide the SEC with bank records to set the record straight.
“Normally we wouldn’t respond to such an ill-informed report but it’s completely wrong and the associated allegation of fraud is something we couldn’t let stand,” Taiclet said.
He also addressed the assertion that he was selling his own stock in the towerco, saying it was part of a standard selling plan and that he had at least two thirds of his net worth in the company’s stock.
In a note Wells Fargo analyst Jennifer Fritzsche said that Muddy Water’s accusation about accounting in Brazil was the most inflammatory of their suggestions but thought the towerco dealt with it well.
“The fact that American Tower came out swinging hard here and given the company’s strong track record, we believe this concern / worry is overdone … we believe to defend its stand this hard American Tower likely had to receive legal approval.”
“We reiterate our outperform rating on American Tower.”
American Tower’s share price had a marginal drop in the wake of the Muddy Waters publication. It dropped roughly 3.5% in trading yesterday but recovered to finish the day down 1%. Today is trading above the US$74.00 mark, as it was before the publication of the report.
