Italy's Bio-on denies U.S. fund's allegations of accounting flaws (updated)

Folli Follie SA

24/07/2019 14:35

(Adds new Bio-on statement)
    MILAN, July 24 (Reuters) - Italian bio-plastics company
Bio-on denied allegations of accounting irregularities by U.S.
hedge fund Quintessential Capital Management, saying it was
considering legal action against the fund.
    Bio-on shares were suspended from trading for excessive
volatility and were indicated down 10.3% after the allegations,
included in a report dated July 19 and posted on
Quintessential's website, were picked up by Italian media on
Wednesday. 
    Quintessential said in the report it had an economic
interest in the price movement of Bio-on shares, which typically
means it has a short position on the company's stock.
    In a statement, Bio-on said it "completely denies
allegations of wrongdoing by its management and that the company
is providing false information to the market."
    In its report, Quintessential called Bio-on "a massive
bubble based on flawed technology and fictitious sales thanks to
a network of empty shell companies."
    In a later statement, Bio-on said its plant near Bologna,
which Quintessential said appeared to still be incomplete and
not in operation, was running and in production. It added that
E&Y had signed off on its 2018 accounts without reservations,
adding it would publish an in-depth document later on Wednesday.
   
    Bio-on is listed on the AIM market, a segment of the Italian
stock exchange dedicated to small and medium-sized companies. It
produces what it says are environment-friendly plastics for the
agri-food, design and cosmetics industries and has a market
capitalisation of just over 1 billion euros ($1.1 billion). 
    Quintessential is a New York-based hedge fund which says it
specialises in exposing corporate wrongdoing. 
    Last year, a report by the fund into Greek jewellery maker
Folli Follie led to an investigation from Greek authorities, the
resignation of the company's founders and the firm seeking
protection from creditors.  urn:newsml:reuters.com:*:nL5N22W3RW    
    ($1 = 0.8968 euros)

 (Reporting by Silvia Aloisi; Editing by Keith Weir and Mark
Potter)
 ((silvia.aloisi@thomsonreuters.com; +39 02 66129 723; Reuters
Messaging: silvia.aloisi.thomsonreuters.com@reuters.net))