Solutions 30 Plunges as Auditor Fails to Sign Off Accounts

(Bloomberg) — Solutions 30 SE shares plunged after a two-week halt, erasing much of the technology-services company’s 1.1 billion-euro ($1.4 billion) market value, as its troubles escalated amid a row with its auditor over the 2020 accounts.

The stock, which had been suspended since May 10, fell as much as 77% and was down 69% at 3.20 euros as of 11:16 a.m. in Paris. Oddo BHF downgraded the shares to underperform from neutral, while Midcap Partners and Berenberg both put their buy recommendations under review.

The Luxembourg-based firm, which has been under pressure from short sellers, issued a statement Sunday citing Ernst & Young LLP as saying it wasn’t in a position to express an opinion on the 2020 financial statement after not being provided with certain information necessary to perform the audit. Solutions 30 published its unaudited accounts over the weekend, saying it “strongly disagrees with the rationale expressed” by the auditor.

The missing certification for the 2020 accounts “raises the prospect of sizable risks for the firm, with possible consequences for its finances,” Oddo analyst Emmanuel Matot wrote in a note.

French market regulator AMF last week urged Solutions 30 to publish its audited 2020 accounts after failing to do so within the required time frame, or at least to announce a timetable on when they would be available. The AMF declined to comment on the company’s latest developments.

Exchange operator Euronext will continue monitoring Solutions 30 shares after trading resumed, a media representative said by email.

Short Interest

“It’s a ridiculous situation,” Eric Hassid, a trader at Aurel BCG in Paris, said by email in response to a Bloomberg query. “It’s not normal that an auditor won’t pronounce itself: either they have doubts on the accounts and don’t certify them, or they don’t and then they need to certify the accounts.”

Short interest in Solutions 30 stands at about 13.6% of shares outstanding, according to data compiled by IHS Markit. Firms that have disclosed short positions include Worldquant and Voleon Capital Management. One noted activist short seller, Carson Block of Muddy Waters Capital LLC, began betting against the stock in May 2019 and unveiled a new report on Monday that the company declined to comment on.

Story continues

In December, Solutions 30 said an anonymous report was being circulated with false allegations against the company. The firm, whose clients include Italy’s Telecom Italia SpA, has repeatedly denied any wrongdoing. It said last month an independent auditor had confirmed the allegations were unfounded.

(Updates with rating changes in second paragraph, analyst comment in fourth, short interest in seventh)

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.