McDermott International, Inc.
Lead Plaintiff Deadline: 09/16/2020
SUMMARY OF CASE:
A securities class action has been filed against McDermott International, Inc. (MDRIQ) on behalf of all those who purchased McDermott common stock between September 20, 2019 through January 23, 2020. This case has been filed in the USDC – Southern District of Texas.
The Complaint alleges that the Company’s executives violated federal securities laws by failing to disclose that Defendants knowingly and/or recklessly made, and caused McDermott to make, materially false and misleading statements, and/or omit material facts regarding the sale of certain assets of McDermott. These statements were made with the intent to conceal the acute liquidity crisis McDermott actually faced, provide the Company time to prepare a prepackaged plan of reorganization with its secured lenders and other stakeholders, and avoid a freefall Chapter 11 filing.
Specifically, on September 20, 2019, McDermott announced in a press release its recent receipt of unsolicited approaches to acquire Lummus Technology, McDermott’s industry leading technology business with a valuation exceeding $2.5 billion. McDermott told investors that it was “exploring strategic alternatives to unlock the value of Lummus Technology,” that the “process of exploring strategic alternatives is part of our ongoing efforts intended to improve McDermott’s capital structure,” and “we plan to use the proceeds from any transaction involving Lummus Technology to strengthen our balance sheet.” These disclosures received widespread attention and the price for McDermott common stock increased.
Then, on January 21, 2020, the truth emerged when McDermott announced its entry of a Restructuring Support Agreement in connection with a Joint
Prepackaged Chapter 11 Plan of Reorganization. In the plan documents, it was revealed that there was not any plan for a near-term sale of Lummus Technology to strengthen McDermott’s balance sheet. The disclosures were made as part of a scheme to artificially inflate the market price of McDermott’s common stock, calm the market and allow the Company to negotiate a prepackaged Chapter 11 bankruptcy restructuring plan.
On this news, McDermott’s share price fell from $0.70 per share on January 17, 2020 to a closing price of $0.12 on June 23, 2020: a $0.58 or an 82.81% drop.