NEW YORK, Oct. 18, 2002 (PRIMEZONE) -- The law firm of Kirby, McInerney & Squire LLP announces that a class action lawsuit was filed on October 18, 2002, on behalf of purchasers of the securities of TXU Corporation ("TXU" or the "Company") (NYSE:TXU) between April 25, 2002 and October 11, 2002 inclusive (the "Class Period"). The action is pending in the United States District Court for the Northern District of Texas.
The complaint charges TXU and certain of its officers and directors with violations of the Securities Exchange Act of 1934. TXU provides electric and natural gas services, merchant energy trading, energy marketing, telecommunications and energy-related services. The complaint alleges that during the Class Period, defendants represented that the Company could succeed in the competition created by deregulation. Defendants then represented that TXU's European operations were improving, it would succeed competition in the U.K. market and it was on track to report EPS of $4.35+ and $4.60+ in 2002 and 2003, respectively. As a result of these allegedly false statements, TXU's stock traded at artificially inflated levels, as high as $56 per share.
Due to this inflation, defendants were able to complete a secondary offering of 11.8 million shares of common stock, priced at $51.15 per share and 8.8 million units of FELINE PRIDES (equity linked debt securities), raising nearly a billion dollars in much needed financing. Subsequent to the offering, defendants needed to maintain a high stock price to avoid triggering additional debt and the conversion of preferred stock into common stock pursuant to a partnership agreement.
On 10/4/02, TXU issued an earnings warning, indicating that due to customer attrition and ongoing problems in Europe the Company would report 2002 EPS of only $3.25. On this news, the Company's stock price declined to $27 per share, from more than $40 per share the prior week. However, the stock continued to be inflated as defendants concealed the extreme liquidity problems from which the Company was suffering. Defendants even assured the market that the Company was strong financially and that the dividend was "sound and secure." Then, on 10/14/02, before the market opened, TXU stunned the market with news that it was cutting its dividend 80%, to $0.125 per share and would no longer support its European operations. The Company's stock price immediately collapsed on this news to as low as $10.10 per share before closing at $12.94, a one day drop of 31%, on volume of 39 million shares.
Plaintiffs are represented by Kirby McInerney & Squire, LLP, which specializes in complex litigation, including securities actions. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and its achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, representative actions in general or about the role of the lead plaintiff in a securities action can be obtained through Kirby McInerney & Squire's website at http://www.kmslaw.com.
If you invested during the period described above, you may, no later than December 14, 2002, move the Court to serve as lead plaintiff in the litigation, if you so choose, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. section 78u-4(a). A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Your ability to share in any recovery is not, however, affected by the decision whether or not to seek appointment as a lead plaintiff. For more information about the case, its claims, and your rights, please contact:
Ira M. Press Mark A. Strauss Ian Washburn, Paralegal Kirby, McInerney & Squire 830 3rd Ave. New York, NY 10022 Tel: (212) 371 6600 Fax: (212) 751 2540
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca