Macquarie Infrastructure Corporation
- Company Name
- Macquarie Infrastructure Corporation
- Stock Symbol
- Class Period
- February 22, 2016 to February 21, 2018
- Motion Deadline
- June 23, 2018
- Southern District of New York
The complaint charges Macquarie and certain of its officers with violations of the Securities Exchange Act of 1934. Macquarie owns and operates a portfolio of infrastructure and infrastructure-like businesses. Macquarie’s most important business segment is its International-Matex Tank Terminals (“IMTT”) business, which provides bulk liquid storage and handling services at marine terminals in the United States and Canada, including for storage of No. 6 fuel oil, the heavy, viscous oil that remains after the more valuable light oil products have been distilled from crude oil.
The complaint alleges that, throughout the Class Period, defendants misrepresented and concealed material risks facing Macquarie’s IMTT business. Defendants repeatedly emphasized IMTT’s “very strong” performance and “high” utilization rates. Defendants touted Macquarie's “good visibility” into “macroeconomic factors influencing supply and demand” as evidence of IMTT’s stability, but concealed IMTT’s dependence on No. 6 fuel oil, the use of which had been declining for years. Rather than disclose the material risk to the Company presented by the decline in No. 6 fuel oil products, defendants downplayed Macquarie’s exposure to fluctuations in the use of petroleum products. Defendants also provided false assurances regarding the sustainability of Macquarie’s dividend. As a result of these misrepresentations and omissions, the price of Macquarie stock was artificially inflated to over $80 per share during the Class Period.
Then on February 21, 2018, after the close of trading, Macquarie announced disappointing fourth quarter 2017 earnings of $0.43 per share, well short of analysts’ estimates, and that it would be slashing its dividend by 31%. The Company blamed the results on the loss of “half a dozen” IMTT contracts at its flagship Louisiana storage facility due to a decline in the No. 6 fuel oil segment. This was the first time Macquarie had disclosed the importance of the No. 6 fuel oil segment to its IMTT business, and to the Company’s performance overall. In response to this news, the price of Macquarie stock declined $26.21 per share, or over 41%, to close at $37.41 per share on February 22, 2018.