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Case Status:    ONGOING    
On or around 08/17/2017 (Ongoing date of last review)

Filing Date: April 22, 2016

According to the law firm press release, Horsehead, together with its subsidiaries, is a leading U.S. producer of zinc metal and a leading recycler of electric arc furnace dust. The Company derives the majority of its revenues from the sale of zinc. On February 2, 2016, Horsehead filed for protection under the bankruptcy laws and, therefore, is not named as a defendant in this action.

In September 2011, Horsehead began construction on a new, purportedly state-of-the-art zinc production facility located in Mooresboro, North Carolina (the “Mooresboro Facility”). The Company heralded a new zinc production process to be used at the Mooresboro Facility and stated that the new facility’s design would rely on sustainable manufacturing practices to produce zinc solely from recycled materials and allow the Company to produce new high-grade zinc varieties. Horsehead also stated that the Mooresboro Facility would produce over 155,000 tons of zinc metal annually once fully operational.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements and/or failed to disclose adverse information regarding Horsehead’s business, prospects and operations, including that: (1) construction defects at the Mooresboro Facility had left the facility unable to operate as planned; (2) operational problems at the facility were significant, pervasive and the result of fundamental engineering and operational defects; (3) the Company had not rectified the problems at the Mooresboro Facility and did not know how to rectify such problems, and as a result, production disruptions and tens of millions of dollars in costs related to these problems were likely and anticipated; (4) instead of permanently fixing problems at the Mooresboro Facility, the Company was employing expensive, temporary workarounds in order to achieve even limited production capacity, and as a result, the facility was not providing significant cost savings, but was instead causing the Company to spend cash at an unsustainable rate; (5) the Mooresboro Facility did not have an annual zinc production capacity of 155,000 tons and could not even sustainably achieve 50% of that capacity; (6) operational issues at the Mooresboro Facility were not improving, but in fact were deteriorating, as stop-gap measures used by the Company to boost production in the short term were unsustainable, untested, highly risky and causing decreased operational stability; and (7) the Company did not have sufficient liquidity, cash on hand and anticipated cash flows for general corporate purposes to sustain it through the full ramp-up of the Mooresboro Facility. As a result of these false statements and omissions, Horsehead securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of $20.70 per share.

On January 23, 2015, Horsehead conducted a secondary offering of 5.75 million shares of its common stock at $12.75 per share. As a result of the secondary offering, the Company generated approximately $73 million in gross offering proceeds.

Then, according to the complaint, Horsehead began to reveal various production problems at the Mooresboro Facility. On December 10, 2015, ratings agency Moody’s downgraded the Company’s corporate debt due to recurring problems at the Mooresboro Facility. By early January 2016, the Company had failed to make an interest payment to certain holders of the Company’s convertible senior notes and shortly thereafter defaulted on multiple credit agreements. On January 22, 2016, Horsehead announced that it was idling the Mooresboro Facility and laying off most employees at the site.

Then on February 2, 2016, Horsehead announced that it had initiated bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code. Subsequently, on February 11, 2016, trading in Horsehead stock was suspended and on February 23, 2016, the Company’s common stock was removed from listing on the NASDAQ stock exchange. At the time that trading in Horsehead stock was suspended the price of the stock had fallen to $0.08 per share.

COMPANY INFORMATION:

Sector: Basic Materials
Industry: Misc. Fabricated Products
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: ZINC
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: D. Delaware
DOCKET #: 16-CV-00292
JUDGE: Hon. Leonard P. Stark
DATE FILED: 04/22/2016
CLASS PERIOD START: 05/21/2014
CLASS PERIOD END: 02/02/2016
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Friedlander & Gorris, P.A.
    222 Delaware Avenue, Suite 1400, Friedlander & Gorris, P.A., DE 19801
    (302) 573-3500 ·
  2. Robbins Geller Rudman & Dowd LLP (San Diego)
    655 West Broadway, Suite 1900, Robbins Geller Rudman & Dowd LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
No Document Title Filing Date
COURT: D. Delaware
DOCKET #: 16-CV-00292
JUDGE: Hon. Leonard P. Stark
DATE FILED: 03/31/2017
CLASS PERIOD START: 02/25/2014
CLASS PERIOD END: 02/02/2016
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Glancy Prongay & Murray LLP (New York)
    122 East 42nd Street, Suite 2920 , Glancy Prongay & Murray LLP (New York), NY 10168
    (212) 682-5340 (212) 884-0988 ·
  2. Montgomery, McCracken, Walker & Rhoads, LLP
    1105 North Market Street, Suite 1500 15th Floor , Montgomery, McCracken, Walker & Rhoads, LLP , DE 19801
    (302) 504-7803 302-507-7820 ·
  3. The Wagner Firm
    1925 Century Park East, Suite 2100 , The Wagner Firm, CA 90067
    310.491.7949 ·
  4. Werner R. Kranenburg
    80-83 Long Lane , Werner R. Kranenburg
    44-20-3174-0365 ·
No Document Title Filing Date