Georgia law firm Holzer Holzer & Fistel said a shareholder has filed a class action lawsuit against the producer in the US District Court for the Northern District of Alabama. The filing is on behalf of those who obtained Walter Energy common stock shared between April 20 and September 21, 2011.
The lawsuit alleges the company was experiencing so-called ‘squeeze’ events in Alabama and lower coal transportation rates in Canada that significantly reduced Walter's coal production.
And it claims the company's commitment to ship more than 700,000 tons of coal in the second quarter at first quarter sales prices would result in a material adverse effect on Walter’s average sales prices and operating results during the second quarter.
It also alleges Walter was experiencing a significant decline in its margins and profitability, and the defendants lacked a reasonable basis for their positive statements about the company and its business prospects during the class period.
It further instructs the affected stockholders of their petition rights and the ability to become a “lead plaintiff” in the suit and encourages individuals to contact the firm with questions.
In the meantime, a handful of legal groups have confirmed the commencement of investigations into the situation, including New York-based Faruqi & Faruqi.
“On August 3, 2011, Walter issued a press release announcing its operating results for its 2011 fiscal second quarter, the period ended June 30, 2011 ... [and] for the quarter, the company announced net income of $US107.4 million, or $1.71 per diluted common share, significantly less than Wall Street estimates,” it said.
“Then, on September 21, 2011, Walter … [announced] its attempt to ‘enhance’ its historical statistical disclosure and its revisions to its 2011 second half sales expectations. In response to this announcement, the price of Walter common stock declined from $75 per share on September 20, 2011 to $66.25 on September 21, 2011, on extremely heavy trading volume.”
Dallas-based Briscoe Law Firm made its announcement on Friday regarding the investigation of legal claims and, on Monday California-headquartered Robbins Umeda and Alabama firm Burke Harvey & Frankowski joined the group.
A spokesperson for Walter Energy did not immediately return an ILN request for confirmation and comment.
