Robbins Arroyo LLP: New Source Energy Partners L.P. (NSLP) Misled Shareholders According to a Recently Filed Class Action
Shareholder rights law firm Robbins Arroyo LLP announces
that a class action complaint was filed in the Supreme Court of the
State of New York. The complaint alleges that officers and directors of
New Source Energy Partners L.P. (Other OTC: NSLP) violated the
Securities Act of 1933 in relation to its offering of Series A Preferred
Units and in connection with the filing of its Registration Statement
and Prospectus with the U.S. Securities and Exchange Commission ("SEC")
on May 7, 2015. New Source Energy acquires, owns, develops, and produces
oil and natural gas properties in the United States.
View this information on the law firm's Shareholder Rights Blog:
New Source Fails to Disclose Declining Financial Position in its
According to the complaint, New Source filed a Prospectus and
Registration Statement with the SEC that contained false and misleading
statements. Specifically, New Source was suffering from such severe cash
flow constraints that a downtick in oil prices would likely put it on
the brink of insolvency. Nevertheless, the risk factors detailed in the
Prospectus did not disclose the severity of its cash flow and other
Further, as revealed in a lawsuit New Source had filed against New
Dominion in the District Court of Tulsa County on March 31, 2015, and
undisclosed in the Prospectus, New Source was already under crippling
financial pressure from New Dominion's withholding of revenues owed to
New Source during 2014 and 2015. Rather than disclose the cash flow
problems in the Tulsa Action, New Source touted that its primary
business objective was to "generate stable cash flows, allowing the
Partnership to make quarterly cash distributions to its unitholders, and
over time, to increase those quarterly distributions."
On July 29, 2015, New Source announced that it was suspending the
quarterly cash dividend to common unit holders, citing the continued low
commodity price environment and current market conditions. Then, on
August 8, 2015, New Source reported a loss of $111 million for the
second quarter of fiscal 2015, and warned it could have difficulty
covering its financial obligations over the next twelve months. On
September 29, 2015 and October 13, 2015, several analysts downgraded New
Source shares. The company currently has an average rating of "sell."
While the offering price of Series A Preferred Units was $25 per unit,
the revelation of New Source's financial issues has caused the market
price for the Series A Preferred Units to fall approximately 94.6% to
$1.36 per unit as of October 21, 2015.
New Source Shareholders Have Legal Options
Concerned holders of Series A Preferred Units who would like more
information about their rights and potential remedies can contact
attorney Darnell R. Donahue at 800-350-6003, DDonahue@robbinsarroyo.com,
or via the shareholder
information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder
rights law. The firm represents individual and institutional investors
in shareholder derivative and securities class action lawsuits, and has
helped its clients realize more than $1 billion of value for themselves
and the companies in which they have invested.
Attorney Advertising. Past results do not guarantee a similar outcome.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151203006202/en/
Copyright Business Wire 2015
Source: Business Wire
(December 3, 2015 - 2:51 PM EST)
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