Cohen Milstein Appointed Co-Lead Counsel in Suntech Securities Litigation
On November 13, 2012, Judge Richard Seeborg of the United States District Court for the Northern District of California appointed Cohen Milstein as co-lead counsel in the securities class action against Suntech Power Holdings Co. Ltd. The litigation seeks to recover damages as a result of allegedly false and misleading information Suntech gave to investors about its financial and business condition. The Suntech Investor Group was appointed Lead Plaintiff.
Court Order Appointing Lead Plaintiff and Lead Counsel - November 13, 2012 [PDF]
This class action was filed in the United States District Court, Northern District of California, on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Suntech’s American depositary shares (“ADSs”) between August 18, 2010 and July 30, 2012, inclusive (the “Class Period”). This class action seeks to recover damages caused by Suntech’s violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder.
Suntech, a solar energy company, engages in the design, development, manufacture, and marketing of photovoltaic products.
The Complaint alleges that throughout the Class Period, the Company made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects.
In 2008, the Company entered into a commitment to invest in Global Solar Fund, S.C.A, Sicar (“GSF”), an investment fund created to make investments in private companies that own or develop projects in the solar energy sector. The Company committed to invest €258.0 million in return for 86% of the share equity of GSF. As of December 31, 2011, Suntech had contributed a total of €155.7 million to GSF. Currently, Suntech has a 50% voting interest in GSF. According to the Company, the general partner of GSF is Global Solar Fund Partners S.a.r.l., which is responsible for the management of GSF.
In May 2010, Suntech entered into an arrangement in which it guaranteed payment obligations under finance facilities provided by China Development Bank to Solar Puglia II, S.ar.L, an investee company of GSF, in the amount of approximately €554.2 million. Additionally, as further security to China Development Bank, the Company was required to maintain cash collateral accounts with a commercial bank in Luxembourg in an amount equal to one installment payment of amounts due under the finance facilities amounting to approximately €30.0 million. As security for the Company’s obligations under the guarantee, Suntech purportedly received a pledge of €560.0 million in German government bonds from GSF Capital Pte Ltd., the parent of the general partner of GSF. According to the Company, the fair value of the debt guarantee was approximately €2.0 million, which was recorded in Suntech’s balance sheet at the effective date of the guarantee.
On July 30, 2012, the Company disclosed that it was conducting an investigation into the security interest that Suntech purportedly received in May 2010 from GSF Capital Pte Ltd. According to the Company, outside counsel that had been hired as part of Suntech’s initiative to monetize its investment in GSF had noted certain facts and circumstances suggesting that the German government bonds in the amount of €560.0 million purportedly pledged to the Company may not have ever existed. The Company further disclosed that it had filed legal claims against relevant parties in multiple jurisdictions to assert control of GSF and its assets.
On this news, shares of the Company declined $0.23 per share, or 14.65%, to close on July 30, 2012, at $1.34 per share, on unusually heavy trading volume, and further declined another $0.21, or 15.67%, to close on July 31, 2012, at $1.13 per share, also on unusually heavy trading volume.