Law firms Kahn Swick & Foti and Rosen Law Firm have filed a class action lawsuit against Teekay Corporation on behalf of investors, whom lawyers claim have been misled by the NYSE-listed company.
The lawsuit seeks to recover damages under US federal securities laws for investors who bought Teekay Corp shares between June 30 and December 17, 2015. During the class period, Teekay allegedly issued “materially false and misleading statements to investors” about its quarterly dividend, the firms say.
Teekay’s “repeated assurances that it would maintain a quarterly dividend of at least $0.55 per share were baseless”, Rosen Law Firm said in a release.
On December 16 last year, Teekay disclosed that its board of directors had approved a plan to reduce the company’s quarterly dividend to $0.055 per share, “down from $0.55 per share in the third quarter of 2015, commencing with the fourth quarter of 2015 dividend payable in February 2016”.
After this news broke, the price of Teekay’s shares plummeted by 58%, Kahn Swick & Foti observed.
“Teekay knew, based on then-present facts, that it could not support future dividend payments in excess of $0.55 per share,” Rosen Law Firm claimed. “The cash flows from Teekay’s master limited partnerships – Teekay LNG Partners LP and Teekay Offshore Partners LP – could not possibly sustain such high dividends.
“As a result, Teekay’s public statements about the strength of its business and financial condition were materially false and misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages,” the investor rights law firm said.
The action is pending in the United States District Court for the District of Connecticut.