Folli Follie’s chairman and vice-chairperson stepped down after a preliminary audit of the troubled jewellery maker revealed discrepancies in 2017 financial statements, Folli said on Wednesday.
Folli, whose finances are being investigated by Greek authorities after equity fund Quintessential Capital Management (QCM) raised concerns over its 2017 finances, has hired Alvarez and Marsal and Ernst & Young to carry out an audit.
Chairman Dimitrios Koutsolioutsos and vice-chairperson Ekaterini Koutsolioutsou, who jointly founded Folli in 1982, stepped down after a board meeting on Tuesday discussed Alvarez & Marsal’s preliminary report over the group’s Asian operations, a big chunk of its turnover.
Folli said the report showed the Asian business had a cash balance of $6.4 million last year compared to $296.7 million reported in 2017 statements. It also revealed that the operations had a loss of $44.7 million last year. Folli had reported a profit of $316.4 million from those operations last year.
“It’s with great sadness and among a simmering crisis for our company, that I set up and served for 36 years, that I am resigning,” Koutsolioutos said in a statement.
“Unfortunately, it was not possible for me to successfully control the operations of the Asian group which has been my responsibility,” he added.
Folli, which employs about 5,000 people worldwide, this month won a two month extension in an injunction protecting its assets from creditors. A group of creditors had sought the lifting of the injunction to recoup loans.
The audit, which was presented to the Greek securities regulator on Wednesday, is key to Folli’s restructuring and the company has pushed back its annual shareholder meeting to October 10, waiting for it to be completed.
Folli said it was working on a restructuring plan which is expected to be completed by the beginning of next month and was in preliminary discussions to secure new funding soon.
Folli’s shares plunged in May after the QCM report, prompting the Greek securities regulator to suspend trading of the shares on May 25 after the firm failed to provide requested financial data.
Dimitris Koutsolioutsos owns a 35 percent stake in Folli, while Fosun holds 15 percent, according to Reuters data. [Reuters]