No connection to Steward’s Malta fiasco, MPT insist as it sues short-sellers Viceroy

American company Medical Properties Trust has instituted a lawsuit in the US federal courts over claims made by Viceroy Research, short sellers and apparent financial investigators, over what it says are bogus financial analysis reports linking it to Steward’s Malta hospitals debacle.

MPT is accusing Viceroy, which has published a number of reports linking it to Steward and the Malta fiasco, of “repeatedly publishing baseless allegations to drive down the company’s stock price”.

MPT’s lawsuit seeks permanent injunctive relief, disgorgement of ill-gotten gains, and compensatory and punitive damages from Viceroy for defamation, civil conspiracy, tortious interference, private nuisance, and unjust enrichment.

One of the analyses in question was recently reported by MaltaToday, and Steward Health Care International was said to have asked the Maltese government to launch an investigation.

In its scathing court filings, MPT has accused Viceroy of deliberately and maliciously “lying about its connections to Steward” in Malta in those reports for its own nefarious purposes and to “prop up its short attack” against the company by claiming it is deliberately concealing secret ownership in Steward-connected hospitals in Malta.

“These are falsehoods, ginned up to try to undercut investor and public confidence in MPT and harm the company,” MTP said in court filings in the state of Alabama, where it is based, this week.

MTP is claiming the reports are completely false and nothing short of a clear-cut case of market manipulation aimed at driving down MPT’s share price in what was part of a blatant short-selling exercise.

MPT says it’s Viceroy’s ‘latest short-and-distort attack victim’

The case accuses Viceroy and its members – Fraser John Perring, Gabriel Bernarde, and Aidan Lau – of being “in the business of mounting serial short-and-distort attacks against public companies” and that “MPT is their latest victim”.

A short-and-distort attack is a type of securities fraud in which investors short-sell a stock and then spread negative rumours about the company in an attempt to drive down stock prices so they can then purchase the shares at a lower cost.

According to MPT, in order to do so Viceroy’s ploy was to maliciously accuse it of being involved in the still Malta hospitals debacle, which has seen the courts rescind the concession for the running of three state hospitals through a government-brokered deal it found was corrupt and fraudulent from cradle to grave.

Such is the toxicity of the Malta fallout that MPT accuses Viceroy of maliciously and falsely linking MPT to the Malta deal in a bid to damage its share price and make a short-selling profit off what it says was bogus research it published.

MPT explains in its court filing how the ploy works: “The playbook for these attacks is simple: Take a short position in a stock or partner with someone who has one, publish false ‘research’ critical of the target company, amplify the false claims on social media, and then reap a profit— either directly, from the stock price drop you bet on and then caused, or indirectly, by collecting payments from other market players who profited on the drop.”

Short-selling, MPT observes, is not illegal in the United States nor is it illegal to couple short-selling with criticism of a target company, provided the speaker does not deliberately or recklessly misrepresent facts for profit.

“But Viceroy does not play by the rules,” MPT said in its filing. “And for months, the firm, its members, and their cohorts have been spreading malicious falsehoods about MPT.”

It makes note of how in late January 2023, Viceroy announced that it held a short position in MPT and simultaneously published the first of 14 reports on the company it would issue in a steady stream over the ensuing weeks.

Those reports, which have also been reported in MaltaToday, have linked MPT to the Malta hospitals fiasco through Steward in Malta. MPT claims in its court filings that this is an utter falsehood aimed at damaging the share price of the company.

MPT is in the business of acquiring and developing net-leased hospital facilities. It had revenues of over US$1.5 million last year and has 444 facilities and approximately 44,000 licensed beds in 10 countries and across four continents.

Court filings explain Steward’s complex corporate structure

Malta, however, is not one of those countries and MPT has gone to pains in its court filing to explain the corporate structures behind the different ‘Stewards’.

According to the filings, in 2020 MPT and members of Steward’s management – including Steward CEO Ralph de la Torre – formed a joint venture named Manolete Health LLC to develop international opportunities.

MPT holds 49% of Manolete Health LLC, and the members of Steward’s management who formed the business hold the other 51% through an investment vehicle that also has ‘Manolete’ in its name.

MPT explained that Steward itself has no interest in the joint venture, which is solely between MPT and the individual Steward managers who formed the investment vehicle.

MPT says it had given a US$205 million loan to Manolete Health LLC, secured by Steward’s management’s equity in Steward, to fund the new venture.

Manolete Health LLC, according to MPT  used that $205 million in part to purchase “the rights and existing assets related to all present and future international opportunities previously owned by Steward” as well as four hospitals in Colombia.

Manolete Health LLC, MPT says in its court filing, also made an unsecured loan of €1.1 million to “an entity controlled by Steward’s management”—and in which MPT says neither it nor Manolete Health LLC holds an interest—”to facilitate the purchase by that entity of Steward Health Care International [SHCI]”.

SHCI, in turn, owned hospital concessions in Malta before they were rescinded by the Maltese courts.

“Although MPT and Manolete Health LLC have considered investing in Malta hospitals and other properties, they have not done so,” MPT said in its court filing.

“Neither entity,” it insisted, “has an ownership interest in SHCI’s Malta hospital concessions.”

‘False, misleading, and defamatory’

In its various reports, Viceroy alleges an MPT hand in the Malta deals and operations. It says its obscure ownership structure is concealing its involvement.

“These statements,” MPT argues, “are false, misleading, and defamatory.”

It points to a Viceroy report on Steward and Malta claiming that MPT “paid $205m for 3 hospitals worth $27m in Malta’ that were ‘under investigation for corruption”.

MPT says Steward did not get any “windfall” of US$205 million from MPT and explains that it received payment, through Manolete Health LLC, for what had been its rights and existing assets related to international opportunities.

“This was fully disclosed contemporaneously. Nor did MPT get any hospitals in Malta.”

It adds, “Although MPT and Manolete Health LLC have considered investing in Malta hospitals and other properties, they have not done so.

“Neither entity has an ownership interest in SHCI’s Malta hospital concessions.”

But MPT accuses Viceroy of “repeating and embellishing the Malta falsehood, with four reports dedicated to it”.

In the 8 February report and in accompanying tweets, it said, “even invented an organisational chart that showed MPT as an owner of ‘Steward Malta’ and made various accusations of fraud”.

MPT’s 45-page court filing goes into Viceroy’s numerous tweets accompanying its reports such as, “As MPW’s crooked subsidiary tried to hide its links with @Steward (US) & #MPW, expect arrests. If the Bond Market thinks these assets are fully backed after the #RoundTripping & #Fraud, they’ve got another thing coming.”

In its 17 March report, MPT accuses Viceroy of continuing to “falsely associate MPT with Malta,” by writing: “MPW [MPT’s New York Stock Exchange abbreviation] has not marked down its investment in its Maltese international joint venture with Steward despite multiple public issues around this concession.”

“These statements are all false, misleading, and defamatory,” MPT contends. “As SHCI stated publicly over a year ago on 1 February 2022, MPT has no ownership of or interest in SHCI. Neither Manolete Health LLC nor MPT has any ownership interest in any Malta property or hospital.

“To make it appear otherwise, and to make it appear as though MPT has lied to investors, [the] Defendants have deliberately conflated Manolete Health LLC with other entities that MPT does not own.”