Pomerantz Grossman Hufford Dahlstrom & Gross LLP has filed a class action lawsuit against McDermott International, Inc. ("McDermott" or the "Company") (NYSE: MDR) and certain of its officers. The class action, filed in United States District Court, Southern District of Texas, and docketed under 13-cv-2442, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of McDermott between November 6, 2012 and August 5, 2013 both dates inclusive (the "Class Period"). This class action seeks to recover damages against the Company and certain of its officers and directors as a result of alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
McDermott is an engineering, procurement, construction and installation ("EPCI") company focused on executing complex offshore oil and gas projects worldwide. The Company provides integrated EPCI services for upstream field developments including, fixed and floating production facilities, pipelines and subsea systems from concepts to commissioning. McDermott operates in approximately 20 countries across the Atlantic, Middle East and Asia Pacific area.
The Complaint alleges that throughout the Class Period, Defendants made false and misleading statements and/or failed to disclose that: (a) the Company was experiencing weakness in its project bidding and execution; (b) the Company was engaging in poor risk evaluation; (c) the Company had been experiencing poor project management; (d) the Company was experiencing material losses in its Middle East, Asia Pacific and Atlantic segments; and (e) based upon the above, the Defendants lacked a reasonable basis for their positive statements about the Company during the Class Period.
On August 5, 2013 the Company issued a press release, reporting the Company's second quarter financial and operating results for the quarter ending June 30, 2013, stating a substantial decrease in the Company's year-over-year financial results which the Company attributed to poor performance of several significant projects in the Middle East and Asia Pacific segment along with underutilization of assets in the Company's Atlantic segment. The Company additionally disclosed that it was taking immediate action to correct "weaknesses" in its "project bidding and execution" and that management was putting in place four initiatives in order to create a "more disciplined culture within the Company" to deliver adequate return on the Company's investors' capital. On this news, McDermott shares declined $1.80 per share or over 19%, to close at $6.93 per share on August 6, 2013.
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