Dynagas LNG Partners LP
- Company Name
- Dynagas LNG Partners LP
- Stock Symbol
- Class Period
- February 16, 2018 to March 21, 2019
- Motion Deadline
- July 16, 2019
- Southern District of New York
The complaint charges Dynagas and certain of its officers with violations of the Securities Exchange Act of 1934. Dynagas is a limited partnership that owns six tanker ships designed for the transportation of liquefied natural gas (“LNG”). The LNG tanker ships are operated by a Dynagas affiliate and are chartered to large energy companies, including Statoil, Gazprom and Yamal, typically for periods of 8 to 10 years.
The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts in order to conceal the unfavorable terms of the Company’s long-term contracts on its LNG tankers, Arctic Aurora and Ob River, which would result in the Company’s inability to sustain its quarterly dividends. As a result of defendants’ false and misleading statements and omissions, Dynagas securities traded at artificially inflated prices or more than $10 per share during the Class Period.
Since its IPO in 2013, Dynagas attracted investors by paying a substantial quarterly dividend, which the Company was able to pay consistently due to the highly predictable nature of revenue from long-term contracts with stable counterparties. Prior to 2018, Dynagas had always paid its stockholders at least $0.36 per share per quarter. In early 2018, however, it became apparent that Dynagas would need to reduce its quarterly distribution to maintain adequate liquidity to meet debt obligations and continue operations. The Company’s management conducted a review and determined to reduce the quarterly dividend to $0.25 per share. According to the complaint, Dynagas and its senior management knew, but failed to disclose, that the Company’s predictable cash flow did not support even this reduced distribution, because Dynagas had already agreed to receive a reduced charter rate for two of its six LNG tanker ships beginning in 2018 and continuing for years to come.
On March 22, 2019, Dynagas was finally forced to explicitly contradict its management’s prior statements to the effect that the $0.25 dividend was supported by the Company’s current cash flow profile as of the summer of 2018. As a result of this disclosure, the price of Dynagas stock declined more than 8% to close at $2.38 per share on March 22, 2019.