D.E Master Blenders 1753 NV, the coffee and tea company spun off by Sara Lee Corp. in June, said it became aware of accounting irregularities at its Brazilian operations after gaining independence and isn’t responsible for any losses incurred by investors.
The company was only informed of possible irregularities after publication of its prospectus and after the shares started trading, Chief Executive Officer Michiel Herkemij wrote in a letter today to VEB, a Dutch shareholder group.
“If any damages were suffered by shareholders, DEMB is of the opinion that it is not liable for such damages,” Herkemij wrote. “The VEB was the one that caused turmoil in the market with its initial disproportional response.”
VEB said in August that investors should be compensated after the discovery of the accounting issues. The irregularities involve uncollectable accounts receivable and incorrect recognition of sales, according to Master Blenders. The company said Oct. 11 that the anomalies would reduce net income by 14 million euros ($17.8 million) less than previously indicated.
Master Blenders shares fell 1.5 percent to 8.82 euros at the close of trading in Amsterdam. The stock dropped 5.6 percent on Aug 2 after the company said it would restate earnings.
The maker of Pickwick tea has said it discovered the irregularities after the end of Sara Lee’s fiscal year as new management conducted an investigation of the accounts.