Pomerantz LLP announces that a class action lawsuit has been filed against Forterra, Inc. (“Forterra” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Eastern District of New York, and docketed under 17-cv-04978, is on behalf of a class consisting of investors who purchased or otherwise acquired Forterra securities: (1) pursuant and/or traceable to Forterra’s false and misleading Registration Statement and Prospectus, issued in connection with the Company’s initial public offering on or about October 19, 2016 (the “IPO” or the “Offering”); and/or (2) on the open market between October 19, 2016 and May 12, 2017, both dates inclusive, seeking to recover damages caused by Defendants’ violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
Forterra, Inc. manufactures water and drainage pipes and various precast products. The Company serves water-related infrastructure applications, including water transmission, distribution, and drainage; and contractors, distributors, and municipalities.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) at the time of the IPO, organic sales in Forterra’s Drainage and Water segments had significantly declined; (ii) the Company was experiencing increased pricing pressure due to competition and continued softness in its concrete and steel pipe business; (iii) Forterra had been losing business in its important pipe and precast business due to in large part to operational problems at its production plants; (iv) the Company had undisclosed material weaknesses in its internal controls that prevented it from accurately reporting and forecasting its financial results; and (v) as a result of the foregoing, Forterra’s public statements were materially false and misleading at all relevant times.
The IPO was successful for the Company, which sold 18.42 million shares of Forterra common stock to the public at $18 per share, raising $331.56 million in gross proceeds ($313.3 million net of underwriting discounts, commissions and offering costs).
On May 15, 2017, pre-market, Forterra reported net sales of $338.3 million for the first quarter of 2017, compared to $187 million in the prior year quarter. Sales growth was solely “attributable to the impact of acquisitions that increased net sales by $163 million” rather than to organic growth. In addition, Forterra reported a consolidated net loss of $22.5 million, or $0.35 loss per share. Forterra’s Chief Executive Officer commented that the Company’s “earnings results for the quarter were impacted by a number of factors that unfortunately will persist through the second quarter of 2017.”
On this news, Forterra’s share price fell $4.79, or 24.29%, to close at $14.93 on May 15, 2017.
At the time of the filing of this action, Forterra common stock was trading below $5 per share, a decline of approximately 75% from the IPO price.