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Lawsuits following Anchor plant closing
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The abrupt closing of Anchor Glass Container Corp.'s bottle plant in South Connellsville last month is playing a key role in a blizzard of class action lawsuits alleging federal securities fraud filed by angry investors. The investors are outraged that the glassmaker publicly touted its profitability, while allegedly failing to disclose excess inventory and misstating the company's ability to overhaul and upgrade manufacturing plants.
At least five law firms have filed complaints against Tampa, Fla.-based Anchor Glass Container Corp. in U.S. District Court in Florida. Along with the company, defendants include Darrin J. Campbell, CEO, and Richard M. Deneau, former CEO. Campbell and Deneau are also members of the company's board of directors.
The lawsuits seek to have the court determine recognition of a class action brought on behalf of all persons who bought stock in the company between Sept. 25, 2003, and Nov. 4 of this year. The lawsuits allege Anchor Glass violated sections of the Securities Exchange Act by making "materially false and misleading" statements about the business and artificially "inflating" the price of the company's stock.
Anchor Glass officials could not be reached for comment Wednesday. But the company believes the complaints lack merit, and intends to "vigorously defend" against the legal action, according to a Dec. 10 filing with the Securities and Exchange Commission.
During a 52-week period, closely held Anchor Glass stock reached a high of $17.97 a share and a low of $4.45.
Anchor Glass has twice sought Chapter 11 bankruptcy protection, in 1996 and in April 2002, to avoid payment of its bonds and to eliminate $50 million in debt. The lawsuits state that the bottle maker sold 7.5 million shares in an initial public offering on Sept. 23, 2003, using most of the $127.8 million raised to repurchase insiders' preferred stock.
However, one lawsuit alleges that Anchor's prospectus for the public offering was "materially false" because it failed to disclose that it had built up a large excess inventory and would therefore be forced to lower production, and the Fayette County plant, one of its main production facilities, was materially impaired.
About 312 workers lost their jobs Nov. 4 when the shutdown occurred -- around 7:30 p.m., about halfway through the 3-11 p.m. shift, just hours after Anchor Glass directors voted to close the plant, citing overcapacity, high shipping costs and other reasons. The plant's 258 hourly workers are represented by the Glass, Molders, Pottery, Plastics & Allied Workers union and the United Steelworkers of America.
One lawsuit said that, the day after the South Connellsville plant closed, Anchor Glass announced a greater-than-expected loss, a companywide revamping, suspension of the quarterly dividend and the sudden resignation of Deneau. In response to the news, Anchor Glass fell from $7.94 per share Nov. 4 to $5.80 Nov. 5.
The 624,000-square-foot Fayette County plant mainly produced beverage and beer glass containers, utilizing two furnaces and four machines.
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December 17th, 2004
Source: Pittsburghlive.com |
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