25. Jul 2019
PHA producer Bio-on roundly rejects all allegations of fraud
Following the publication of an investigative report from Quintessential Capital Management (QCM), which asserted that Bio-on is a "house of cards", a scheme conceived by management to enrich themselves on at the expense of shareholders, Bio-on has released a statement in which it vigorously denies any wrongdoing.
QCM writes: “A seemingly successful company boasting growing revenue and profits, Bio-on is actually a massive bubble based on flawed technology and "fictitious " sales thanks to a network of empty shell companies.
Despite high-sounding announcements and ambitious projects, several years after its IPO Bio-on has not yet produced or sold anything in significant quantities, except to shell companies controlled by or affiliated to itself. Of the many production facilities announced over the years, only one has been built at exorbitant prices and it would seem neither completed nor in operation.
The real financial situation is precarious and the accounting has serious irregularities. Given the facts as a whole, we believe that the Bio-on situation is unsustainable: the company is heading towards total collapse and its equity is correspondingly worthless.”
A salient note is that QCM has an economic interest in the price movement of the securities mentioned in this report. The firm has a short position in Bio-on and will benefit from any decline in the stock price.
Bologna-based Bio-on develops and produces PHA bioplastics at its 1000 tpa pilot plant in Castel San Pietro Terme. Marketed under the brand name Minerv PHA, the products have been certified as biodegradable by the USDA and Vincotte. The company has collaborated with various partners, including Unilever. The latter used Bio-on’s bioplastic micro powders in the development of a new line of sun protection products, the company announced in January of this year.
Bio-on refuted the allegations made in the QCM report, stating that its pilot plant is “central to the Company's business to create a new standard in the PHA production” and that a video is available on the company’s website that “traces the construction phases of the plant and shows the current production”. All PHA produced to date has been used for the production of sun protection products “within the joint venture Aldia S.p.A. in partnership with Unilever and of furniture within the partnership with Kartell S.p.A., already on sale on the market”. According to Bio-on, the production plant has been visited over the last few months by “multiple public, financial and industrial players, to whom the full operation of the same was shown.”
The company further stated that “what has been published is subject to the Company's and its lawyers' evaluation for the purpose of its own protection against potential price manipulations by hedge funds.”
Bio-on is listed on the AIM segment of Borsa Italiana. Its share price lost 10.31% of its value yesterday.