28 August 2013 23:19 [Source: ICIS news]
HOUSTON (ICIS)--KiOR is challenging a lawsuit alleging that the US renewable fuels producer and its officers violated US securities law and misled investors about the business and its operations, a company spokesperson said on Wednesday.
“We believe that we have strong defenses to these claims, and we intend to defend them vigorously,” said Kate Perez, KiOR’s director of cooperate communications and public relations. “We have notified our insurance carrier of the claims.”
Last week, a federal class action lawsuit was filed on behalf of investors who purchased KiOR stocks between 14 August 2012 and 7 August 2013.
According to the lawsuit, KiOR claimed its first commercial-scale biofuel facility in Columbus, Mississippi, has a capacity of 13m gal/year of cellulosic diesel and gasoline. The company said it plans to build a large-scale biofuel facility in Natchez, Mississippi, with larger production capabilities.
“Throughout the class period, the defendants misled investors concerning the timing of projected production levels of biofuel at the Columbus facility,” the lawsuit alleged. “Specifically, despite constant setbacks and missed milestones, the defendants continued to falsely reassure investors that the company remained on track to achieve commercially meaningful biofuel production levels at the Columbus facility during the timeframes promised.”
During a Q1 earnings call on 9 May, KiOR CEO Fred Cannon had projected that Q2 fuel production at the Columbus facility would be 300,000-500,000 gal, keeping the company on track to produce 3m-5m gal of fuel in 2013, according to the lawsuit.
However, KiOR disclosed on 8 August that Q2 fuel shipments at the facility reached only 75,000 gal, the lawsuit said.
“On this news, KiOR investors fled from the stock, causing its share price to decline $2.12/share, over 44%, over the course of the next six trading sessions,” the lawsuit said.
KiOR shares fell to $2.62/share on 15 August from $4.76/share on 7 August, the day before the company released its Q2 earnings.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages," the lawsuit alleged.
The plaintiff is requesting a trial by jury to determine whether federal securities laws were violated and whether KiOR and its officers knowingly and recklessly issued false and misleading financial statements.
Additionally, the jury should determine if the prices of KiOR securities during the class period were artificially inflated because of the conduct of the company and its officers, as well as whether the investors have sustained damages.
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