SAN DIEGO, April 22, 2016 /PRNewswire/ -- Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/horsehead/) today announced that a class action has been commenced in the United States District Court for the District of Delaware on behalf of purchasers of Horsehead Holding Corp. ("Horsehead") (NASDAQ: ZINC) securities during the period between May 21, 2014 and February 2, 2016, inclusive (the "Class Period").
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/horsehead/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint charges certain of Horsehead's officers and directors with violations of the Securities Exchange Act of 1934. 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.
Plaintiff seeks to recover damages on behalf of all purchasers of Horsehead securities stock during the Class Period (the "Class"). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation. The firm has obtained many of the largest securities class action recoveries in history and was ranked first in both the amount and number of shareholder class action recoveries in ISS's SCAS Top 50 report for 2014. Please visit http://www.rgrdlaw.com/cases/horsehead/ for more information.
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SOURCE Robbins Geller Rudman & Dowd LLP