Covia Holdings Corporation f/k/a Fairmount Santrol Holdings Inc. Class Action Lawsuit

19 days left to seek lead plaintiff status

Case Summary

Company Name
Covia Holdings Corporation f/k/a Fairmount Santrol Holdings Inc.
Stock Symbol
Class Period
March 15, 2016 to June 29, 2020
Motion Deadline
February 8, 2021
Northern District of Ohio

The Covia Holdings Corporation f/k/a Fairmount Santrol Holdings Inc. class action lawsuit charges certain Covia and Fairmont Santrol executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of Covia and/or Fairmount Santrol securities between March 15, 2016 and June 29, 2020, inclusive (the “Class Period”).  The Covia class action lawsuit was commenced on December 10, 2020 in the Northern District of Ohio and is captioned Plagens v. Deckard, No. 20-cv-02744.

Covia purports to be in the business of minerals and materials solutions for the industrial and energy markets, including producing proprietary sand for use in fracking.  On June 30, 2020, the New York Stock Exchange (“NYSE”) delisted Covia stocks, and now Covia’s shares trade over the counter under the ticker symbol “CVIAQ.”  Prior to a merger with Unimin Corporation on or about June 2018, shares of Fairmount Santrol traded on the NYSE under the ticker symbol “FMSA.”  On or about June 1, 2018, Fairmount Santrol and Unimin entered a strategic combination, whereupon Fairmount Santrol shareholders received approximately $0.73 in cash consideration and .2 shares of Covia for each share of Fairmount Santrol held.  Any remaining Fairmount Santrol shares that could not be converted into a whole Covia share were redeemed for cash.  On June 29, 2020, Covia/Fairmont Santrol announced it had filed for Chapter 11 bankruptcy in the United States Bankruptcy Court in the Southern District of Texas.

In the 2010s, fracking became widely accepted and brought the United States closer to energy independence.  Sand, used as a proppant, is an integral component of fracking.  Proppant sand became a growing business.  In a competitive industry, Covia/Fairmont Santrol differentiated itself with its purportedly high-quality fracking sand.  Covia/Fairmont Santrol marketed the new products to the biggest drillers.  Drillers paid a premium at the time for specialized sand from Fairmount Santrol and other producers, seeking to improve output by any means.  At its peak price in the mid-2010s, a type of sand that had grains coated with resin went for $250 a ton, a markup of $150 a ton over the cost of raw sand.

The Covia class action lawsuit alleges that, throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Covia/Fairmont Santrol’s proprietary “value-added” proppants were not necessarily more effective than ordinary sand; (2) Covia/Fairmont Santrol’s revenues, which were dependent on its proprietary “value-added” proppants, were based on misrepresentations; (3) when Covia/Fairmont Santrol insiders raised this issue, defendants did not take meaningful steps to rectify the issue; and (4) as a result, defendants’ statements about Covia/Fairmont Santrol’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

On March 22, 2019, Covia/Fairmont Santrol revealed that it had received a subpoena from the U.S. Securities and Exchange Commission  (“SEC”) investigating certain value-added proppants On this news, Covia/Fairmont Santrol’s share price fell nearly 7%.

On November 6, 2019, Covia/Fairmont Santrol revealed that, in addition to the earlier SEC subpoena, additional information was requested and subpoenaed regarding current and former employees.  On this news, Covia/Fairmont Santrol’s share price fell an additional 4.3%.

Then on June 29, 2020, Covia/Fairmont Santrol announced that it had entered into a comprehensive restructuring agreement with lenders and voluntarily filed petitions under Chapter 11 of the United States Bankruptcy Code to implement the agreement.

Finally, on June 30, 2020, the NYSE delisted Covia/Fairmont Santrol, stating in part that “the Company is no longer suitable for listing . . . after the Company’s June 29, 2020 disclosure that the Company filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code.”  On this news, Covia/Fairmont Santrol’s share prices fell more than 37%, damaging investors.

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Covia and/or Fairmount Santrol securities during the Class Period to seek appointment as lead plaintiff in the Covia class action lawsuit.  A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class.  A lead plaintiff acts on behalf of all other class members in directing the Covia class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the Covia class action lawsuit.  An investor’s ability to share in any potential future recovery of the Covia class action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the Covia class action lawsuit or have questions concerning your rights regarding the Covia class action lawsuit, please provide your information here or contact counsel, Michael Albert of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at malbert@rgrdlaw.com.  Lead plaintiff motions for the Covia class action lawsuit must be filed with the court no later than February 8, 2021.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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