Abengoa is an engineering and clean-technology company based in Spain that uses innovative technology solutions for sustainability in the areas of energy and the environment. It generates electricity from renewable resources, converts biomass into biofuels, and produces drinking water from sea water.
This class action alleges that, since November 12, 2014, Abengoa and certain of its executive officers and directors have misrepresented the liquidity of Abengoa’s balance sheet in corporate reports filed with the SEC and in conference calls with financial analysts.
According to the complaint, these misrepresentations artificially inflated the price of Abengoa’s ADS. (ADS, or American depository shares, are shares of foreign-based companies that are priced in dollars and traded on American stock exchanges.)
What investors are part of this class action? The class period is currently defined as all persons who purchased Abengoa ADS between November 12, 2014 and August 2, 2015, inclusive (the “Class Period”). Abengoa ADS trade on NASDAQ under the symbol “ABGB”.
Procedural Status. The lawsuit was filed on August 10, 2015 and is captioned Francisco v. Abengoa, S.A. et al. It was filed in the New York Southern District Court. Its civil docket number is 1:15cv06279. The lead plaintiff deadline is October 9, 2015.
In its registration statement filed with the SEC on October 4, 2010, Abengoa stated that its operations required substantial capital and that it therefore operated “with a significant amount of indebtedness.” For this reason, Abengoa’s financial health is extremely sensitive to changes in its capital structure.
In conference calls with financial analysts on November 12, 2014, February 23, 2015, and May 14, 2015, Abengoa led the market to believe that it was successfully improving its liquidity and capital structure by executing its plans.
On a conference call on July 31, 2015, Abengoa and announced that it would revise its outlook on its free cash flows. In addition, it revealed that its working capital was not actually improving and announced a plan to sell assets worth 400 million euros. However, an officer stated that “at this point in time, the company has no plan to…tap the capital markets in any manner.”
Just three days later, on August 3, 2015, Abengoa announced that it would hold an extraordinary shareholders meeting to seek approval of two plans: one to issue shares to raise 650 million euros, and another to sell assets worth 500 million euros (100 million more than it had just announced).
As a result of the news, the price of Abengoa’s ADS dropped from its closing price of $11.06 on July 31, 2015 to close at $6.00 on August 4, 2015. This represents an $8.1 billion loss in market capitalization in the span of just two trading days.
Article Type: LawsuitTopic: Investments