NEW YORK, Nov. 3, 2004 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action suit on behalf of all purchasers of the common stock of Star Gas Partners, L.P., ("Star Gas" or the "Company") (NYSE:SGU), during the period between July 25, 2000 and October 18, 2004 (the "Class Period").
The action, entitled McCole, et al. v. Star Gas Partners, L.P., et al., Case No. (not yet assigned), is pending in the United States District Court for the District of Connecticut, and names as defendants the Company, its Chairman of the Board, Chief Executive Officer, and a Director of the Company, Irik P. Sevin, and its Chief Financial Officer and Controller, Ami A. Trauber. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood's website at: www.whesq.com.
The complaint alleges that defendants' publicly disseminated Class Period statements, which portrayed the Company's business as robust, even in the face of rising heating oil prices and a significant restructuring, were materially false and misleading for the following reasons: (a) Star Gas was experiencing serious problems as a result of its reorganization, particularly in the area of customer service, which was deteriorating rapidly, resulting in a migration of customers; (b) the purported cost savings from the restructuring in the heating oil division had not materialized and, in fact, had resulted in operating deficiencies that negatively impacted the Company; (c) the Company had not adequately hedged against a sharp rise in heating oil prices during the Class Period; (d) the Company was ill-equipped to handle the surge in heating oil prices during the Class Period and falsely comforted investors with representations that Star Gas would simply pass on high wholesale prices to retail customers; (e) the Company's problems and deteriorating business seriously threatened its ability to pay out its quarterly distribution, a major reason investors purchase the Company's units; and (f) the Company's business had deteriorated so sharply over the Class Period that it was in palpable danger of breaching financial and/or performance covenants in its loan agreements, thereby seriously jeopardizing its liquidity and viability. Defendants engaged in the wrongdoing alleged in the complaint so that the Company's units would trade at artificially inflated prices, paving the way for several securities offerings during the Class Period, totaling $96 million.
The truth was revealed on October 18, 2004, before the open of ordinary trading, when Star Gas shocked the market by announcing that the Company's Petro division had suffered a substantial earnings decline in fiscal 2004, which was expected to continue into fiscal 2005, due to an inability to pass on increased oil prices to its customers and to problems with its restructuring, forcing the Company to cut its Minimum Quarterly Distribution. Moreover, the earnings shortfall breached covenants in the Company's credit agreements, jeopardizing its liquidity and raising the possibility of bankruptcy, according to the Company's press release. In response to this announcement, the price of Star Gas common units dropped precipitously, falling 80% in one day, from a closing price of $21.60 per unit on October 15, 2004, to a closing price of $4.32 per share on October 18, 2004 (the next trading day), on trading volume that was many times its average daily trading volume.
If you are a member of the class described above, you may, not later than December 20, 2004 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400 Craig Lowther, Wechsler Harwood Shareholder Relations Department: clowther@whesq.com