GFL shares tumble as company denies short-seller's allegations

GFL Environmental Inc., a company founded and headed by Saultite Patrick Dovigi, is vigorously disputing a short-seller's report issued Tuesday that concludes GFL's shares are worthless without access to fresh capital.

"We are very disappointed by the baseless report put out today by Spruce Point Capital," said Dino Chiesa, lead independent director of GFL's board.

"Spruce Point has never engaged with the company and the report is without merit," Chiesa said in a written statement.

"We have the support of our shareholders and the utmost confidence in management, who have held themselves to the highest ethical standards. We continue to believe in the strategy of the business and its focus on creating long-term shareholder value."

In a news release, GFL described Spruce Point Capital's report as "misleading and false."

"The report contains numerous inaccuracies and mischaracterizations, which GFL believes are solely intended to benefit Spruce Point, who has disclosed that it stands to profit significantly in the event that the stock price of GFL declines," the company said.

As North American markets closed on Tuesday, The Motley Fool Canada website ran the headline: "GFL Environmental (TSX:GFL) Is Down 9%: 'Worse Than Enron!'"

Based in Vaughan, Ontario, GFL is North America's fourth largest diversified environmental services company.

In May 2018, the company signed a 10-year, $750,000 deal for naming rights to Sault Ste. Marie's main sports/ entertainment venue, which was renamed GFL Memorial Gardens.

GFL is active across Canada and in 23 U.S. states, with more than 13,000 employees and 135,000 commercial and industrial customers including the City of Sault Ste. Marie.

In a 107-page report, Spruce Point Capital Management questioned what it termed an "extremely aggressive and opaque business model" and was critical of some of Patrick Dovigi's connections.

Dovigi, who now serves as GFL's chief executive officer, tended goal for the Erie Otters in the late 1990s and was drafted by the Edmonton Oilers.

In 2017, the 41-year-old former Saultite was named by Canadian Business magazine as one of the nation's richest people.

The magazine estimated Dovigi's worth then at $1.08 billion.