AlphaCredit To Restate Financial Statements

MEXICO CITY, April 20, 2021 /PRNewswire/ -- Alpha Holding, S.A. de C.V. ("AlphaCredit" or the "Company"), a leading technology-enabled, financial services company, today announced that the Company will restate its financial statements for the years ended December 31, 2019 and 2018 (the "Prior Period Financial Statements") to correct an error in the Company's accounting for its derivative positions.  The Company has determined that a restatement was necessary based on an internal review by the Company and following discussions with KPMG (KPMG Cárdenas Dosal, S.C., "KPMG"), the Company's current auditing firm, and Deloitte (Galaz, Yamazaki, Ruiz Urquiza, S.C.), its auditor for the years ended December 31, 2019, December 31, 2018, and prior years.  The Company's previously released Prior Period Financial Statements, quarterly financial statements for 2020 and any earnings releases or other communications related to those periods should no longer be relied upon. 

AlphaCredit identified additional accounting errors that it anticipates will result in a restatement of other assets and other accounts receivable in the Prior Period Financial Statements or a current write-down of other assets and other accounts receivable.  The errors relate to the Company's: (i) allowance for loan losses; (ii) reserves for certain accounts receivables; and (iii) amortization of certain capitalized expenses.  Although AlphaCredit cannot predict the full impact of the restatements and adjustments at this time, it anticipates there will be an impairment of a majority of the MXP 4.1 billion reported as other assets and other accounts receivable in the Company's September 30, 2020 balance sheet. 

The Board of Managers of Alpha Latam Management, LLC, the general partner of the Company's controlling shareholder, has formed a special committee (the "Special Committee") comprised of non-management members of its Board of Managers to conduct an investigation of the accounting errors (the "Internal Investigation").  The Special Committee has retained advisors, including but not limited to, the law firms Skadden Arps Slate Meagher & Flom LLP ("Skadden") and Nader, Hayaux y Goebel, S.C.  In addition, Skadden has retained forensic accountants from a Big 4 accounting firm to assist Skadden in advising the Special Committee with respect to these matters.

The Company is diligently working with its current and predecessor auditing firms to complete the analysis of the accounting errors and to finalize the adjustments of its Prior Period Financial Statements, as well as to complete the audit of its 2020 annual financial statements. 

About AlphaCredit©AlphaCredit© is a technology-enabled, financial services company in Latin America that provides consumer loans to individuals and financial solutions for SMEs in Mexico and Colombia.

Forward-looking statementsExcept for historical information, the matters discussed herein are "forward-looking statements" within the meaning of the applicable securities laws and regulations.  Forward-looking statements, including statements regarding the Company's intent to restate its Prior Period Financial Statements, the estimated adjustments of the restated financials and the Internal Investigation by the Special Committee, involve risks and uncertainties which may cause actual results to differ materially from those stated here.  Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the risk that additional information may arise from the final conclusion of the Special Committee's Internal Investigation, the risk that the process of preparing and auditing the financial statements or other subsequent events would require the Company to make additional adjustments, the time and effort required to complete the restatement of the financial reports and the impact of the inquiry initiated by any related or additional governmental investigative or enforcement proceedings.  Forward-looking statements reflect management's analysis as of the date hereof.  The Company does not undertake to revise these statements to reflect subsequent developments.  This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities. 

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SOURCE AlphaCredit