Thnx. And now from the NYT: "Shares in Belgian Company Fall 64% as Questions Grow
By ALEX BERENSON Shares in A.C.L.N. Ltd. (news/quote ), a Belgian- based company that trades on the New York Stock Exchange, plunged 64 percent yesterday on questions about the company's financial statements.
A.C.L.N.'s sudden plunge is an embarrassment for the exchange, as well as J. P. Morgan Chase (news/quote ), which has repeatedly touted A.C.L.N. as a bargain. For months, short-sellers ? who profit when stock prices fall ? have warned the exchange and J. P. Morgan of apparent discrepancies in A.C.L.N.'s financial statements.
Yesterday, as A.C.L.N.'s shares began to slide after a negative article about the company by TheStreet .com, an Internet financial news service, J. P. Morgan Chase cut its rating on A.C.L.N. from strong buy to long-term buy.
An analyst at J. P. Morgan, Gregory E. Burns, said he had downgraded the stock because he could not confirm that the company had the $117 million in cash that it claimed. "It's challenging when you go from being an analyst to an auditor," Mr. Burns said.
BB&T (news/quote) Capital Markets, the only other securities firm to track A.C.L.N., continues to rate the company as a buy.
Robert Zito, a spokesman for the Big Board, would not comment on whether the exchange was investigating A.C.L.N. or planned to halt trading in its stock.
Shares of A.C.L.N. plunged $16.71, to $9.40, yesterday on much-heavier- than-normal trading volume of 9.4 million shares. The company said in a statement that the decline might have been the result of "speculation in the marketplace" and said it had no further comment. A spokeswoman for the company did not return calls.
A.C.L.N., which arranges the transport of cars from Europe to Africa, has been a target of short- sellers this fall because of inconsistencies in its financial statements. The company, which is headquartered in Cyprus and has its main offices in Belgium, has reported skyrocketing sales and profits, and has fewer than a dozen employees, according to filings with the Securities and Exchange Commission.
In addition, four companies that hold about 2.8 million shares of A.C.L.N. and were disclosed in the company's prospectus for its initial offering can no longer be found in A.C.L.N.'s filings with the S.E.C. The companies, which were owned by Joseph J. H. Bisschops, A.C.L.N.'s chairman, according to the prospectus, appear simply to have disappeared. The missing shares are about 20 percent of A.C.L.N.'s shares outstanding.
Perhaps the most intriguing question about A.C.L.N. concerns its relationship with Merhi Abou Ali Merhi, a Lebanese car trader whose name does not appear in any of A.C.L.N.'s public financial statements.
Public records reveal numerous connections between A.C.L.N. and Mr. Merhi, who owns half of a ship that A.C.L.N. says it owns.
A.C.L.N. says that it is not associated with Mr. Merhi and that its financial statements are accurate.
A.C.L.N. went public by selling shares on the Nasdaq stock market in 1998 and shifted to the New York Stock Exchange in July. The company charters ships in Europe and arranges for "port agents" to load them with cars in Germany and Belgium and unload them in Africa.
In its financial filings, A.C.L.N. says it owns the Sea Atef, a used container ship that it bought last year. But corporate records from Malta show that Mr. Merhi owns half of the Sea Atef Shipping Company, which owns the Sea Atef.
Other records show that Mr. Merhi owns most of two other ships, the Sea Tarak and the Sea Ali, which A.C.L.N. has chartered to transport its cars.
In an interview last month, Christian L. Payne, the chief financial officer of A.C.L.N., said that A.C.L.N. owns 100 percent of the Sea Atef. Mr. Merhi holds half of the Sea Atef Shipping Company in his name on behalf of A.C.L.N. for a small fee, Mr. Payne said.
"A.C.L.N. does not have a broader relationship with Mr. Merhi," Mr. Payne said.
In addition, records show that all three ships are managed by the same company and all three have as their port agent in Antwerp, Belgium, a company called Global Car Transport. On the Web site of a Belgian company that tracks the shipping industry, Global Car Transport is identified as the Antwerp agent for Abou Merhi Lines.
According to Mr. Payne, A.C.L.N. uses an African port agent called Germanco to unload some of its ships. Mazen Abushanab, a partner in the Abu Group, Germanco's parent company, said Germanco has had a long relationship with Abou Merhi. He said he had heard only vaguely of A.C.L.N.
"Germanco ? the only company that they are agents of are Abou Merhi Lines," Mr. Abushanab said. "There's never been a bill from A.C.L.N. in Africa. It's always Abou Merhi."
Other people in the shipping industry say that many of the cars that A.C.L.N. carries are provided by Mr. Merhi. Mr. Merhi could not be reached for comment.
Told of the apparent connections between Mr. Merhi and A.C.L.N., Mr. Payne suggested that several different people with the name Abou Merhi might be connected with the company.
"Abou Merhi is a common name," Mr. Payne said. He added that he did not know the details of the company's partnerships.
Timothy Mulligan, the president of Forensic Advisors, which examines balance sheets for institutional investors and has released reports about A.C.L.N., said the Big Board and J. P. Morgan should have done more work to verify A.C.L.N.'s financial statements.
"You don't have to be a C.P.A. to look at that annual report and scratch your head and kind of ask more questions," said Mr. Mulligan, a certified public accountant. "They should have gone back to the company and gotten that annual report straightened out." |
