Venator Materials PLC
- Company Name
- Venator Materials PLC
- Stock Symbol
- Class Period
- August 2, 2017 to October 29, 2018, including purchasers pursuant to the August 3, 2017 initial public offering and/or the December 4, 2017 secondary public offering
- Motion Deadline
- September 29, 2019
- Southern District of New York
The complaint charges Venator, certain of its officers and directors, the underwriters of its August 2017 initial public offering (“IPO”) and December 2017 secondary public offering (“SPO”), and certain shareholders that sold shares in the IPO and SPO with violations of the Securities Exchange Act of 1934 and/or Securities Act of 1933. Venator was previously organized as the Pigments & Additives division within Huntsman Corporation, a multinational manufacturer of chemical products.
The complaint alleges that in connection with Venator’s IPO and SPO, and continuing throughout the Class Period, defendants misrepresented the true extent of the damage caused by a fire at Venator’s Pori, Finland facility, the cost to rehabilitate the facility, and the impact of the fire on Venator’s business and operations. The Company also assured investors that the Pori facility would be rebuilt with insurance proceeds within its policy limits. Throughout the Class Period, Venator and its executives continued to assure investors that the rebuild of the Pori facility was on track and that the Company would be able to fully recoup the production capacity lost in the fire. As a result of these misrepresentations, Venator shares traded at artificially inflated prices throughout the Class Period, with its share price reaching a high of more than $25 per share.
The truth began to emerge on July 31, 2018, when Venator revealed that the fire damage at the Pori facility was far more extensive than defendants had previously represented to investors. Specifically, Venator announced that the cost to repair the facility had climbed to more than $375 million above the insurance policy limits, more than double the amount disclosed to investors just two months after the IPO. On this news, the price of Venator shares declined from $15.35 per share to $14.62 per share.
Then, on September 12, 2018, Venator announced that it was abandoning the Pori facility altogether, despite the Company’s previous assurances that the site would be repaired and restored back to its full operating capacity. The Company also revealed that the facility was still only operating at 20% capacity and thus had not increased production by any meaningful amount during the 13 months since the IPO. During an investor conference call held later the same day, Venator’s CEO, defendant Simon Turner, admitted that the Company had misrepresented the true extent of the fire damage. When asked by an analyst whether Venator had provided a “misestimate of the initial amount of damage from the fire” and whether “the actual work that needed to be done was missed,” CEO Turner agreed that “it was a combination of factors, both of which, you’ve mentioned already.” These disclosures caused the price of Venator shares to decline from $11.35 per share to $10.81 per share.
Finally, on October 30, 2018, Venator announced that, in addition to the over $500 million in costs and lost business associated with the Pori fire incurred to date, the Company had incurred a restructuring expense of approximately $415 million and would incur additional “charges of $220 million through the end of 2024” related to the Pori site. As a result of these disclosures, the Company’s share price declined from $8.00 per share to $6.47 per share, or more than 19%.