COLCHESTER, Conn., Dec. 19, 2004 (PRIMEZONE) -- Scott + Scott, LLC has filed complaints charging Star Gas (NYSE:SGU) or (NYSE:SGH) and certain of its officers and directors (Irik P. Sevin and Amy Trauber) with violations of the Federal Securities Laws (Securities Exchange Act of 1934). Star Gas is a holding company for regulated utilities and other unregulated businesses. The initial complaint on file had a date beginning with securities' purchasers of 12/4/03 (the complaint Scott + Scott, LLC filed for other counsel has an initial opening period of July 25, 2000. Upon appointment of lead plaintiff and the filing of an amended complaint, this issue will be resolved in the best interest of the damaged class as defined at that time.). For more information please e-mail attorney Neil Rothstein at nrothstein@scott-scott.com (or immediate contact at 619/251-0887) or see the end of this release for additional contact information.
Notably, Energy West (Nasdaq:EWSTE), a natural gas, propane and energy marketing company similar to Star Gas, announced that it finally filed its Form 10-K for the fiscal year ended June 30, 2004 and its quarterly report Form 10-Q for the first quarter of fiscal 2005, which ended September 30, 2005. The restatement covers Fiscal Years 2002, 2003, and the first three quarters of Fiscal Year 2004. On September 29, 2004, the Company announced that it was delaying the filing of its Annual Report in order to complete a review of the accounting for certain contracts. The Company has restated its earnings to correct accounting errors and previous valuation on contracts with its subsidiary, Energy West Resources, Inc. On December 6, 2004, Energy West issued a Form 8-K announcing an extension and amendment of its credit agreement with LaSalle Bank---a situation not seemingly dissimilar to the case against Star Gas.
UPDATED DETAILS
On October 6, 2004, Wachovia Securities, a non-bank subsidiary of Wachovia Corporation downgraded a company called Inergy LP (Nasdaq:NRGY), a public stock trading on the Nasdaq under the symbol NRGY. Defendant Star Gas's stock dropped to $4.32 per share from a closing price of $21.60 after it announced it was selling its propane unit. Seemingly, this Wachovia downgrade was unrelated to any of the facts at hand and oddly, the stock price of Inergy went up 18 cents that day. On November 5, 2004, Star Gas Partners L.P. announced that it had successfully entered into a Letter Amendment and Waiver under its Credit Agreement with Wachovia Bank, National Association, as Administrative Agent and other lenders. The company added that the ability to borrow under the amendment was subject to a number of specific conditions in addition to the usual borrowing conditions. The special stipulations include the Partnership's Propane segment-Petro-keeping in effect, without any amendment, its proposed commitment letter with JP Morgan.
The company said that its Star Propane division entered into a Commitment Letter with JP Securities Inc. and JP Morgan Chase Bank, providing for funding of a refinancing by Petro and Star Propane, of all of their existing working capital facilities and all of the outstanding institutional indebtedness of Petro and Star Propane. Under the Commitment Letter, JP Morgan Chase Bank committed to provide a $300 million asset-based senior secured revolving credit facility and an additional $300 million senior secured bridge facility to Star Propane and Petro as joint borrowers.
The company disclosed that the proceeds of the above credit facility and the bridge facility or public or private offering, whichever one, had to be used to refinance the existing working capital facilities, including the above mentioned amendment with Wachovia and others, and to refinance all of the outstanding institutional indebtedness of Petro and Star Propane. Further, the company revealed that its Star Propane Segment issued an Engagement Letter, and appointed JP Morgan Securities to act as the underwriter or placement agent of a $300 million public or private offering of debt securities. The waiver is valid until December 17, 2004.
SUDDEN SALE OF PROPANE UNIT TO INERGY
Suddenly and without any warning, Star Gas agreed on November 18, 2004 to sell its propane unit to Inergy LP for about $475 million. The deal, as announced, was expected to close in late December, but for financial purposes would be treated as if it closed Nov. 30, 2004. Star Gas stated that it would use the proceeds from the sale to, amongst other things, prepay debt of the propane segment, a significant amount which was owed to Wachovia Bank.
That same day, November 18, 2004, Inergy announced a reported net loss of $9.6 million, which it claims is typical for the 4th Quarter because of the season. The previous year, it stated a net loss of $5.4 million. Also on that date, Inergy entered into a material definitive agreement as reported in a Form 8-K. Part of that agreement forced Star Gas Partners, L.P. and Star Gas LLC to enter into a five-year non-competition agreement with respect to the propane business in certain regions. In order to finance the deal, Inergy entered into a commitment letter with none other than JP Morgan Chase Bank, JP Morgan Securities Inc., who had been supposedly coming to the rescue of Star Gas, and Lehman Commercial Paper Inc. and Lehman Brothers Inc. for a $400 million, 364-day credit facility and $325 million five-year credit facility, all of which would be secured by all of Inergy, L.P.'s assets. On November 19, 2004, the day after Inergy had announced its reported net loss, Wachovia Securities upgraded Inergy back to the position it had been in.
On November 30, 2004, Inergy announced equity commitments in connection with the Star Gas Acquisition -- privately signed and negotiated -- to allow Kayne Anderson MLP Investment Company and Tortoise Energy Infrastructure Corporation (NYSE:TYG), two major Star Gas shareholders, to sell common units for net proceeds estimated at $85-$110 million. Finally on December 9, Inergy and its newly formed subsidiary Inergy Finance Corporation announced that they intended to do a private placement sale, subject to market conditions, of $400 million senior unsecured notes due 2014. It stated that it intended to use part of those proceeds to pay for the proposed purchase of the propane division of Star Gas Partners, L.P. -- being sold for $450 million.
On Dec. 15, Star Gas Partners L.P. (SGU) received an informal inquiry from the Securities and Exchange Commission's enforcement division. It also said it completed the $475 million sale of its propane segment to Inergy L.P. (NRGY). Star Gas stated at the time of the deal's announcement that the sold operations, Star Propane, employs about 1,200 people and has 345,000 customers. Star Gas stated it sold its propane business to help reduce the company's debt. Star Gas was also seeking to resume dividend payments, which were suspended in October. Star Gas said at the time that it planned to use $182 million of the proceeds to repay secured notes in its petroleum units, Petro Holdings Inc. and Petroleum Heat and Power Co. The company also plans to use $114 million in proceeds to prepay secured notes in its propane unit. Star Gas stated it expects to record a gain of $150 million on the sale and that it used $311 million in proceeds to buy back senior secured notes and first mortgage notes of the heating oil segment and propane segment. Star Gas said it will recognize a loss of $43 million on the early redemption of the senior secured notes of the heating oil and propane segment.
Scott + Scott, LLC continues its investigation which has yielded additional facts. You can contact Scott + Scott, LLC at 800/404-7770 (EDT) or 800/332-2259 (PST); you can also dial direct at 860/537-3818 in Connecticut or 619/233-4565 in California. Those who purchased securities in Star Gas can contact the firm to further discuss this matter. Attorney Neil Rothstein is available to speak with you.
If you are a member of the class described above, you may, not later than this Monday, move the Court to serve as a 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. Scott + Scott will consult with any client shareholder if they are being considered for such a position and further advise them of their duties should they choose to assume them.
A LAW FIRM DEDICATED TO SHAREHOLDER RIGHTS
Scott + Scott, LLC, which prides itself on its dedication to the class and its tenacity for the interest of the class, recently won an important decision in the Halliburton Securities Litigation (NYSE:HAL) case on behalf of its Lead Plaintiff halting a settlement that was deemed inadequate by the Court and completed secretly behind its lead plaintiff's back (a non-profit charitable organization). Scott + Scott, LLC fought this battle to successfully have final approval denied. This unusual victory (described in the articles below) took over a year and a half: http://www.washingtonpost.com/wp-dyn/articles/A13102-2004Sep10.html or http://www.taipeitimes.com/News/biz/archives/2004/09/12/2003202628 .
Additionally, in Connecticut, partner David Scott recently defeated the primary portion of defendants' motion to dismiss in the Priceline.Com Securities Litigation. The firm is also working as counsel on United Rentals (NYSE:URI) and the Hartford Financial Services Group in the same jurisdiction. It recently acted as co-lead counsel in a securities case against Annuity and Life, Re Holdings, et al where it settled with certain defendants for $16.5 million. That litigation continues against the accounting firm KPMG.
Scott + Scott, LLC, a Connecticut law firm with offices in Ohio and California, is a law firm with a national practice and reputation. Scott + Scott dedicates itself to client communication and satisfaction. The firm is currently litigating major securities, antitrust and employee retirement plan cases throughout the United States and represents pension funds, charities, foundations, individuals and other entities worldwide -- in both class and non-class cases. Please visit our website at http://www.scott-scott.com to learn more about the firm, its practice and other cases. If you wish to discuss this action with an attorney or have any questions concerning this notice, your rights or any matter within our expertise, please contact attorney Neil Rothstein at nrothstein@scott-scott.com or at StarGasSecuritiesLitigation@scott-scott.com . You can also call 800/404-7770 (EST) or 800/332-2259 (PST). You can dial direct in California at 1/619-233-4565. Scott + Scott, LLC is located at 108 Norwich Avenue, Colchester, CT 06415; phone: 860/537-3818; fax: 860/537-4432. This release is issued in accordance with the applicable federal law of the United States.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca