Investors make decisions based largely on what a company’s financial information indicates about its future operating results. However, if “events and uncertainties” exist that might cause a company’s future results to be very different, its SEC filings must reveal them. The complaint for this class action claims that Forterra’s filings for its initial public offering (IPO) did not disclose these events or uncertainties, in violation of the Securities Act of 1933.
The class for this action is all buyers of Forterra common stock issued for Forterra’s October 21, 2016 IPO.
Forterra was formerly Hanson Building Products, at which time it made building materials. In March 2015, the company was bought by Lone Star Fund IX, an investment advisory firm. After a reorganization, Forterra made pipe and other precast products for water-related infrastructure.
Between April 2015 and October 2016, Lone Star made Forterra acquire six other companies; as of June 2016, the complaint claims that Forterra had roughly $1.2 billion in debt, more than triple what it had formerly carried and far more than its competitors.
On July 8, 2016, Forterra filed an S-1 Registration Statement, which, with amendments, was used for its IPO. It made many positive statements about the company, such as the following:
However, the complaint clams that the document was inaccurate because it omitted a long list of other facts, such as the following:
According to the complaint, at the time of this lawsuit’s filing, Forterra’s stock was trading at 75% below its IPO price.