By Nell Mackenzie and Akanksha Khushi
LONDON (Reuters) – The shares and bonds of CPI Group fell sharply on Tuesday after short-selling hedge fund Muddy Waters (NYSE:) said it had bet against the credit of the Luxembourg-based commercial landlord.
In a report, the fund said CPI PG’s controlling shareholder, Czech billionaire Radovan Vitek, had misstated the value of the company. The report also said some income had been booked against real estate properties that were in fact empty plots of land.
The company did not immediately respond to a request for comment.
CPI Group’s Frankfurt-listed shares were last down 2.8% on the day, while the price of its 2027 medium-term note fell 3.5 cents on the day to 70.259, according to data from Tradeweb.
Muddy Waters did not specify against which bond it had taken a short position and the company has several outstanding notes listed..
CPI PG owns properties in Germany, the Czech Republic, Poland and elsewhere in Central Eastern Europe.
The report details four transactions totaling about 441 million euros ($481.00 million) in which the report says the cash and real estate accounts “could be misstated.”
The four transactions focus on properties and companies changed hands among different owners through holding companies.
($1 = 0.9168 euros)