Regulator Escalates Inquiry into Holcim Acquisition Expenses; Former Chairman Repays S/5.9M Amid Scrutiny
CPAC has more than doubled off its 52-week low of $5.1 on elevated volume (4.5× avg).
Summary
Cementos Pacasmayo responded to an SMV inquiry regarding S/77.6 million in Holcim acquisition expenses and a S/5.9 million payment from former Chairman Eduardo Hochschild, which the company classifies as a donation despite regulatory and shareholder pressure.
Key Events · Legal and Risk Events · CPAC
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SMV Inquiry Response
Cementos Pacasmayo submitted a detailed response to the SMV's Official Letter regarding the S/77.6 million in expenses associated with the Holcim acquisition, which the regulator is scrutinizing for causality and benefit to the company.
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Former Chairman's Payment
Former Chairman Eduardo Hochschild made a S/5.9 million payment to the company, equivalent to legal, tax, and financial advisory fees, citing shareholder dissatisfaction and SMV inquiries. The company recorded this as a donation and 2026 income.
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Accounting & Tax Implications
The company will not restate 2025 financials, classifying the payment as 2026 income. It also decided not to deduct the S/5.9 million in advisory fees for 2025 income tax due to concerns about the causality principle.
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Governance Concerns Highlighted
The filing disclosed that certain board members, including Mr. Hochschild, abstained from votes related to the assumption of transaction costs, indicating potential conflicts of interest. No fairness opinion was obtained for these expenses.
Analysis · CPAC · Manufacturing
This filing provides a detailed response to the Peruvian securities regulator's (SMV) escalated inquiry into the company's accounting of S/77.6 million in expenses related to the Holcim acquisition. The SMV is questioning the legitimacy and causality of these expenses, which significantly impacted the company's 2025 net income and EBITDA. A key development is the voluntary payment of S/5.9 million by former Chairman Eduardo Hochschild, equivalent to legal, tax, and financial advisory fees, made in response to shareholder dissatisfaction and SMV scrutiny. While the company frames this as a "donation" and not an admission of error, it highlights significant governance concerns and the ongoing pressure from regulators and investors. The company's decision not to deduct these fees for 2025 income tax due to causality concerns further underscores the contentious nature of these expenses. Investors should monitor the SMV's ongoing investigation and any potential restatements or sanctions.
At the time of this filing, CPAC was trading at $10.51 on NYSE in the Manufacturing sector, with a market capitalization of approximately $952.9M. The 52-week trading range was $5.10 to $11.50. This filing was assessed with negative market sentiment and an importance score of 9 out of 10.