According to the law firm press release, RYAM previously existed as the Performance Fibers Division of Rayonier, Inc. (“Rayonier”). On January 27, 2014, Rayonier announced that it would spin-off its Performance Fibers Division, to be effected as a tax-free spin-off whereby 100 percent of the new company’s shares would be distributed to shareholders of Rayonier. On June 30, 2014, Rayonier completed the spin-off of its Performance Fibers business (the “Separation”), resulting in two independent, publicly-traded companies.
The complaint alleges that during the Class Period and including at the time of the Separation, Defendants misled RYAM’s public investors by disseminating a series of materially false and misleading statements concerning RYAM’s financial condition. In particular, RYAM improperly recorded and/or failed to record on its publicly issued financial statements material liabilities for environmental remediation and related obligations in violation of Generally Accepted Accounting Principles (“GAAP”). RYAM also failed to provide sufficient disclosure to investors to permit a meaningful evaluation of the true scope and extent of these environmental remediation and related liabilities, which were associated with decades of environmental pollution. These materially misleading misstatements and omissions regarding the Company’s financial results occurred, in large part, because of at least the following: (1) Defendants incorrectly accounted for RYAM’s remediation and long-term monitoring and maintenance for environmental liabilities; (2) as a result, the Company understated its Environmental Reserves; (3) as a result, the Company did not record appropriate reserves as required by GAAP; (4) as a result, the Company did not disclose a range of possible reserves for probable and reasonably estimable environmental remediation and related liabilities as required by GAAP; (5) as a result, RYAM did not properly estimate known and probable environmental remediation obligations as required by GAAP; and (6) as a result, RYAM did not maintain adequate internal and financial controls.
In addition, throughout the Class Period including at the time of the spin-off, Defendants also misled RYAM’s public investors about the true demand for its products, namely acetate. While Defendants continuously touted that acetate demand was growing, in reality, demand was slowing, particularly because large customers in China had excess inventories.
Furthermore, as part of the spin-off process, RYAM incurred approximately $950 million of new debt to effect the Separation. Approximately $906 million of borrowings from the debt issuance was distributed back to RYAM’s former parent company. RYAM knowingly and/or recklessly made misleading and false statements so that it could effectuate the Separation and raise borrowings in amounts and on terms that it otherwise would not have been able to receive.
As a result of Defendants’ wrongful acts and omissions, and the resulting decline in the market value of the RYAM’s shares of common stock, Plaintiff and the other Class members have suffered significant losses and damages. Plaintiff seeks to recover damages on behalf of all persons or entities that purchased or otherwise acquired shares of RYAM common stock during the Class Period (the “Class”). Plaintiff is represented by Saxena White and Grant & Eisenhofer, which have extensive experience in successfully prosecuting investor class actions, including actions involving financial fraud.
An amended complaint was filed on September 11, 2015.
On April 26, 2016, the Court issued an Order granting Defendants' motion to dismiss. Plaintiffs were given leave to file an amended complaint. Plaintiffs did not file, thus Judgment in favor of Defendants was entered on July 25.