According to the docket, on January 5, 2000, the Court entered the Orders granting the plaintiffs motion for approval of the class action, plan of allocation, and award of attorney fees and reimbursement of expenses. The Court further entered that day the Final Judgment and Order of Dismissal. The case is closed.
Earlier, on June 30, 1999, the Court entered a Conditional Order of Dismissal. Because a settlement was reached, the case was dismissed without prejudice to be reinstated by July 30, 1999. The case was closed. On July 13, 1999, the case was reopened, and a Stipulation of Settlement was filed on October 19, 1998. By the Notice of Pendency and Proposed Order, a settlement fund was established in the amount of $3,000,000 in cash.
The complaint charges OEDC and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Complaint alleges that
in November 1996, OEDC completed an initial public offering ("IPO" or the
"Offering") of common stock pursuant to false and misleading Roadshow
presentations and Registration Statement and Prospectus, selling more than 4.2
million shares at $12 per share for proceeds of more than $50 million.
The complaint further alleges that after the Offering, defendants inflated OEDC's stock price to as high as $16 per share by making false and misleading statements about the status of and prospects for OEDC's natural gas operations as well as the Company's ability to achieve strong cash flow and earnings per share growth during 1997 and 1998, assuring investors that OEDC would generate 1997 cash flow and EPS of at least $26 million and $0.65, respectively. Defendants represented to investors that OEDC would quadruple its positive cash flow in fiscal 1997 alone. As late as April 1, 1997, less than three weeks before defendants were forced to disclose the precariousness of OEDC's business operations and after the Company had in desperation secretly arranged to hire investment advisors to sell off the Company or its assets, the defendants continued to maintain that the Company's operations were "in line" with expectations and that OEDC would "gather momentum" in 1997.
Then on April 18, 1997, defendants finally began to admit that OEDC was a
financial disaster, disclosing: (i) that certain of the Company's wells,
including South Timbalier B-8, one of the Company's primary wells, had ceased
production months earlier; (ii) that OEDC's South Dauphin II Limited
Partnership program was experiencing cost overruns of 20%; (iii) that OEDC was
having substantial difficulties in obtaining federal regulatory permits for
certain of its wells which had been drilled in shallow and environmentally
sensitive waters; and (iv) that production at South Timbalier D-5 (a well whose
production the defendants had been speaking positively about just weeks before)
would produce little or no economic benefit to OEDC.
This news stunned OEDC's investors. Defendants further revealed that instead
of the substantial cash flow and EPS gains promised by defendants, OEDC would
generate huge losses in 1997 and would, at best, break even in 1998. The
cumulative effect of these disclosures was too much for OEDC's shareholders to
bear and the price of OEDC stock reacted accordingly, dropping by over 50% to
$3.25 per share, a decline of more than 75% from its Class Period high.