Spruce Point issues ‘strong sell’ on WSP Global, sees up to 50% downside risk

Spruce Point Capital writes: “WSP is experiencing growing financial and business strains that are being masked by aggressive and non-standard financial reporting, accounting and reduced transparency. Based on our investigation, we estimate a 25% to 50% downside risk, or approximately C$110.00 -$165.00 per share. The report highlights several key concerns with the Company, including: WSP appears to be under greater financial and business stress that is evident by its increasingly opaque financial reporting; Cash flow and earnings quality appear to be embellished by aggressive and problematic accounting revisions; WSP’s Board leaders and Audit Committee appear in need of fresh oversight, with new members independent of management and the clubby Montreal business community; WSP shares present a poor risk/reward while trading at an unwarranted premium to peers.”