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Law360 (May 17, 2021, 2:45 PM EDT) -- Solar panel infrastructure company Array Technologies Inc. was hit Friday with a proposed securities class action alleging that the company failed to disclose that increasing prices for steel and freight transportation would decrease its margins in 2021 as it held a series of public offerings in the past eight months.
In the suit, the Plymouth County Retirement Association said Array, which had touted its cost and supply chain management strategies in offering documents, "shocked the market" on May 11 by reporting that "unprecedented" increases in steel and shipping costs had a negative impact on its quarterly results and its expectations for its 2021 financial performance overall. In several instances, the company attributed the spike in costs to the coronavirus pandemic.
The pension fund claims the news prompted analysts to downgrade their ratings for the company and that within a trading day of the announcement, trading prices for the company's shares fell from $13.46 to $11.49 apiece.
Array, which produces ground mounting systems that move solar panels throughout a day to optimize the sunlight the panels get and which was previously known as ATI Intermediate Holdings LLC, held public offerings in October 2020, and secondary public offerings in December 2020 and March 2021.
The pension fund claimed the company garnered close to $2.9 billion between the three offerings, not including underwriters' options for additional stock sales.
On Monday morning, market records showed Array trading at about $14 a share, up slightly from the trading price cited in the complaint.
The complaint also names nine individuals who were executives and directors of Array during the proposed class period, four associated companies, including a onetime parent company and three co-controlling members of ATI, and 14 companies that served as underwriters for one or more of the company's public offerings.
The complaint alleges violations of fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, including specific claims concerning fraud in registration statements and securities offerings.
The proposed class would include those who purchased Array shares between Oct. 14, 2020, when the prospectus for the first offering became effective, and May 11, 2021, the day the company's announcement allegedly pushed down trading prices for its shares.
The case is assigned to U.S. District Judge Victor Marrero.
Counsel for the investors and representatives for Array did not immediately respond to requests for comment Monday.
The Plymouth County Retirement Association and the proposed class are represented by Christopher J. Keller, Eric J. Belfi and Francis P. McConville of Labaton Sucharow LLP and Guillaume Buell of the Thornton Law Group LLP.
Counsel information for Array Technologies Inc. wasn't immediately available Monday.
The case is Plymouth County Retirement Association v. Array Technologies Inc. et al., case number 1:21-cv-04390, in the U.S. District Court for the Southern District of New York.
--Editing by Stephen Berg.
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