American Tower Corp (NYSE:AMT), an independent owner, operator, and developer of wireless broadcast communication real estate with more than 55,000 managed sites. responded to accusations from Muddy Waters Research that it is “engaged in value destroying investment binge overseas.”
American Tower misstated its accounts
The research firm also alleged that American Tower Corp (NYSE:AMT) significantly misstated its accounts, which could amount to fraud. According to Muddy Waters Research, based on the financial statements of the company, there is an approximately $250 million discrepancy between the amounts it paid in acquiring the towers in Brazil, and the actual selling price of the property.
The research firm said that American Tower Corp (NYSE:AMT) claimed that it paid $585.4 million for the tower, but the actual price was about $300 million.
Muddy Waters sales ratings for American Tower shares
Muddy Waters Research recommended a strong Sell rating for shares of American Towers. The research firm valued the stock at $44.57 per share, which represents a 40.3% downside.
In response, American Tower Corp (NYSE:AMT) wrote in a Form 8-K filing with the Securities and Exchange Commission (SEC) that the Muddy Waters Research report contained inaccurate statements. The company provided information regarding its communication sites acquisition in Brazil in 2011.
The company said that the acquisition price of the tower company with 666 communication sites was BRL 974 or $585 million, which was funded by its subsidiary, ATC do Brasil – Cessao de Infra-Estruturas Ltda using cash on hand, inter-company loans, equity contributions from its parent company, and cash from operations.
“The inter-company loans of BRL 554 million or approximately $335 million are registered with the Central Bank of Brazil. In addition, the company utilized equity contributions of BRL 303 million, or approximately $184 million, which are also registered with the Central Bank of Brazil. The remainder of the aggregate purchase price was cash from operations. The company received documentation confirming the full payment of these funds to the seller,” explained American Tower Corp (NYSE:AMT).
American Tower calls allegation ‘wildly inaccurate’
The company emphasized, “an internationally-recognized accounting firm” helped in the purchase price allocation of the acquisition. American Tower Corporation added that Deloitte & Touche LLP was the auditor of its financial statements for the past three fiscal years.
In an interview with CNBC, American Tower CEO Jim Taiclet emphasized that the early Latin American investments and acquisitions of the company were its “highest returning assets.” He called the Muddy Waters Research report “unfounded.” He said, “Our track record actually speaks for itself” on the issue.
Taiclet added, “The allegation of fraud is wildly and completely inaccurate and easily provable and we provided that proof, both to the public markets and to the SEC today.”