Court OKs shareholder settlement with owner of Blairstown plant
Tuesday , August 26, 2008 11:07ET
Aug 26, 2008 (The Gazette - McClatchy-Tribune News Service via COMTEX) -- Aug. 26--The New York-based owner of the idled ethanol plant in Blairstown has agreed to pay $2.8 million to settle a shareholder class-action lawsuit.
A settlement with Xethanol Corp. has received preliminary approval from the U.S. District Court for the Southern District of New York, according to the New Orleans law firm that led the case for shareholders, Kahn Gauthier Sevick LLC.
The lawsuit represents shareholders who bought the company's stock on the American Stock Exchange between Jan. 31, 2006, and August 8, 2006. It is a combination of several cases filed against the company over allegedly false claims and omissions. Throughout the period, Xethanol repeatedly assured investors that it could sustain itself on revenue from corn ethanol production while successfully commercializing biomass ethanol production. Share prices fell steeply as it became clear that the company could not commercialize its biomass ethanol production plans in the near-term.
Prices of Xethanol stock fell from over $15 to $4 per share during the period covered by the lawsuit.
The lawsuit also claimed that the company misrepresented the experience of management and standards of eth ics, or to disclose related party transactions with individuals who had records of stock fraud.
A hearing on the proposed settlement scheduled for 9:30 a.m. Sept. 15 in U.S. District Court for the Southern District of New York will be used to determine if the proposed settlement is fair, reasonable and adequate.
In addition to the Blairstown plant, Xethanol formerly owned another plant in Hopkinton. It has since sold the Hopkinton plant.
Xethanol does not admit to any of the claims in agreeing to settle the case.
-- Contact the writer: (319) 398-8317 or david.dewitte@gazcomm.com
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