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GFL founder Patrick Dovigi 'disgusted' by 'unfounded attacks' from New York hedge fund

Spruce Point Capital Management targets waste management giant
20180912-GFL Memorial Gardens-DT-14
Sault-born, Toronto-based Patrick Dovigi, GFL Environmental CEO, at the official unveiling of the GFL Memorial Gardens sign, Sept. 12, 2018. Darren Taylor/SooToday

Patrick Dovigi, the Sault Ste. Marie-born billionaire founder of GFL Environmental Inc., issued another statement early Aug. 25 deploring allegations made by New York short-seller Spruce Point Capital Management.

"After founding this company in 2007 with $250,000 and four employees, to now growing the company to nearly $4 billion of revenue, with over 13,000 employees, completing over 130 acquisitions and raising over $8 billion of equity and debt during that time period, our track record speaks for itself," said the former Edmonton Oiler draft pick who pivoted to the world of business.

GFL's 135,000 commercial and industrial waste-management customers include the City of Sault Ste. Marie.

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

Last week, Spruce Point Capital Management issued a 107-page report that questioned some of Dovigi's business connections and what it described as GFL's "extremely aggressive and opaque business model."

GFL's shares dropped nine per cent the day the Spruce Point report was issued, and had not fully recovered by close of trading Aug. 24.

A handful of U.S. law firms have announced investigations of the Spruce Point allegations, some seeking whistle-blowers with knowledge of GFL.

"Instead of focusing our energy on comments clearly made to manipulate our stock, we will remain focused on building our business and executing on our strategy," Dovigi said in an early-morning news release.

"We will continue pursuing strategic and accretive growth opportunities as we build on our record of successfully integrating acquired companies and realizing synergies.  Simply, we are committed to delivering on our mission to grow the company, serve our customers safely and create shareholder value over the long-term as we have for all of our stakeholders over the last 14 years."

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GFL announced that it has closed its previously announced upsized offering of US$750 million senior notes.

Said Dovigi: "This marks another milestone for GFL.... The closing of the notes offering and the expansion of our U.S. footprint through the announced acquisitions of WCA Waste Corporation and the Waste Management, Inc. and Advanced Services Disposal, Inc. divestiture assets reflect our strong commitment to a dynamic growth strategy and the creation of long-term shareholder value. 

With the offering now complete, we anticipate closing the acquisition of the WM/ADS divestiture assets by late Q3/early Q4 2020 and the WCA acquisition before the end of Q4 2020.

"The notes offering also demonstrates that investors are aligned with our strategy, supportive of management and not easily swayed by the ... innuendo and flawed analyses in Spruce Point Capital Management's self-serving attack on the company."

"The GFL board of directors stands 100 per cent behind the company's management team, strategy and focus on long-term shareholder value in the face of Spruce Point's misrepresentation of the company's public disclosures and their confusion about our industry and even basic accounting principles," added Dino Chiesa, lead independent director of GFL's board.

"The board, led by its independent directors and after discussions with the company's external auditors and consultation with its other advisors, reviewed the short seller's allegations and found them deeply flawed and singularly meant to inflict damage to the company's business, its leadership and its shareholders."

"GFL's financial disclosures are accurate in all material respects, appropriate and comply with all regulatory requirements.  It should be noted that GFL, its operations and this team have been through several very thorough and extensive diligence processes by leading global private equity firms, pension funds and sovereign wealth funds over the course of almost 14 years, as well as being vetted by underwriters and investors throughout a robust initial public offering process. We are committed to acting in the best interest of all shareholders and defending the organization against such false and distorted attacks," Chiesa said.