Tue 11 Nov 2008 09:39

Legal firm files lawsuit against Britannia Bulk


Lawsuit alleges misstatements relating to bunker fuel hedges were made.



US legal firm Shalov Stone Bonner & Rocco LLP has filed a securities class action lawsuit against Britannia Bulk Holdings Inc. on behalf of purchasers of the company's common stock issued in its initial public offering.

The complaint names as defendants the company and certain of its executives, underwriters, and directors.

The lawsuit alleges, among other things, that the company made material misstatements or omissions in its prospectus and registration statement for its initial public offering filed with theSecurities and Exchange Commission.

The alleged misstatements and omissions relate to the company's use of "chartered-in capacity," forward freight agreements, and naked bunker fuel hedges. The lawsuit is pending in the United States District Court for the Southern District of New York.

News of the lawsuit follows the decision made last month by the New York Stock Exchange to suspend the trading of shares in Britannia Bulk. NYSE Regulation Inc. said the security was no longer suitable for trading in light of the company’s news announcements on October 28 and 29, 2008.

London-based Britannia Bulk Holdings, an international provider of dry bulk shipping and maritime logistics services with a focus on transporting dry bulk commodities in and out of the Baltic region, revealed that Lloyd's TSB and Nordea Bank Denmark had provided notice of acceleration and demanded immediate repayment of $158.7 million outstanding on a loan due to a default on the terms.

The company said it expected to announce a significant net loss for the three months ended September 30, 2008, which will have resulted partly from a bunker fuel hedge operation which is currently uncompetitive following the recent fall in bunker prices.

Referring to the bunker hedge, Britannia Bulk said "In the three months ended September 30, 2008, the company entered into a bunker fuel hedge which is currently uncompetitive because it is hedged to prices which are significantly above the current market price of bunker fuel. As a result, the company currently estimates that its aggregate bunker fuel hedging losses for the three months ended September 30, 2008 will be significant."

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