Complaint accuses energy company of excluding retail bondholders from exchange of unsecured corporate bonds for secured bonds; suit claims company unjustly enriched itself by impairing contractual rights in violation of federal securities law
Leading securities litigation law firms Grant & Eisenhofer and Gardy & Notis have filed a class action lawsuit against natural gas and oil company Vanguard Natural Resources (NASDAQ: VNR) and its subsidiary VNR Finance Corp., alleging that the Houston-based company violated federal securities law when it executed a private debt exchange which allowed only select group of institutional bondholders to exchange their unsecured corporate bonds for secured bonds. The suit alleges that the exchange offer, which took place earlier in February, wrongfully denied retail bondholders the opportunity to participate.
The class action was brought in New York federal court by an individual Vanguard bond buyer on behalf of all holders of 7.875% Senior Notes due 2020 (CUSIP 92205CAA1) who are not qualified institutional buyers.
The complaint alleges that Vanguard, facing a challenging financial climate marked by falling oil and natural gas prices, attempted to alleviate the pressure on servicing its debt by making the exchange offer to a limited number of its bondholders.
Under the terms of the offer, certain 2020 Notes would be exchanged for newly-issued 7.0% Senior Secured Second Lien Notes due 2023. The suit contends that the Feb. 10, 2016 exchange — which allowed participation only by bondholders who were qualified institutional buyers (as defined under Rule 144A of the Securities Act of 1933) — violated the rights of the remaining non-qualified institutional buyers.
Prior to the exchange, the total principal value of the 2020 Notes outstanding was approximately $550 million. After the exchange, Vanguard reported that $168,170,000 in aggregate principal amount of the 2020 Notes had been validly tendered and were exchanged.
“Vanguard’s exchange offer effectively created two classes of holders of the 2020 Notes: the haves and the have-nots,” explained Jay Eisenhofer, managing director of Grant & Eisenhofer. “The non-qualified buyers of the notes — that is, average retail investors — have in most instances been holders of these bonds for years, and should have had the same opportunity to an exchange as the qualified institutional buyers were.”
He continued, “The oil and gas sector has been hit hard and Vanguard has not been immune. Qualified institutional buyers of the company’s debt were given a VIP opportunity to exchange unsecured 2020 Notes for new, secured 2023 Notes, putting them in a far superior position in the event they become creditors in a bankruptcy. In contrast, the non-qualified institutional buyers — the have-nots — were denied the privilege of participating in the exchange offer and have become significantly disadvantaged in a default scenario.”
The suit contends that Vanguard deliberately concealed from non-QIBs the company’s dire outlook of the exchange offer’s effect on the 2020 Notes’ liquidity.
The suit contends that, since the direct effect of the exchange was the subordination of the 2020 Notes held by Class Members to the QIBs holding 2023 Notes, Vanguard impaired class members’ contractual rights in violation of the Trust Indenture Act of 1939. The complaint also alleges that the private exchange offer violated the implied covenant of good faith and fair dealing, and that Vanguard executives unjustly enriched themselves as a result of the exchange offer.
Grant & Eisenhofer director Gordon Z. Novod stated: “To paraphrase George Orwell, Vanguard regarded some 2020 Noteholders as more equal than others. The defendants’ under-the-table dealing, while it would help reduce their own indebtedness, impaired the rights of our client and other class members to receive principal and interest, and reduced the liquidity of the 2020 Notes.”
Mr. Novod adds that the risk of such an exchange offer was not disclosed by the defendants in their prospectus for the 2020 Notes, nor could it have been foreseen by the non-qualified institutional buyers at the time they purchased their 2020 Notes.
“These were public bonds, registered under the Securities Act, and the non-qualified institutional buyers of these bonds bought them on the open market,” he said. “They had no indication that their rights might have been impaired because the company struck a better, secret deal to institutional buyers who were allowed to trade up their positions from unsecured ones to secure ones.”
Mr. Eisenhofer added, “We intend to vigorously pursue legal relief for bondholders who were excluded from the company’s exchange offer.”
Duo glide around world’s largest fountain in Dubai
Paragliders Llorens and Goberna take magical flight above the Palm Fountain.
Horacio Llorens and Rafael Goberna defied gravity to perform The Breaking Pointe flight around the world’s biggest fountain at The Pointe, Palm Jumeirah in Dubai. Here is all you need to know:
– Spaniard Llorens is a five-time world champion and Infinity Tumbling Guinness World Record holder, who has performed a series of spectacular projects during the last five years including paragliding with a flock of starlings and with the beautiful Aurora Borealis as a backdrop.
– Brazilian Goberna was a Guinness Book of World Records winner at only 12-years-old and, in December 2016, he took to the skies above one of the seven wonders of the natural world when paragliding at Iguazu Falls.
– This time around, the duo teamed up in Dubai to showcase The Palm Fountain at the Pointe, Palm Jumeirah. They overcame a tricky preparation period to expertly glide between the fountain’s powerful jets of water.
– Spanning across the boulevard, the Palm Fountain features two giant floating platforms covering 14,000 square metres of sea water. Reaching an impressive 105 metres high and lighting up the Dubai sky with 3,000 LED lights, the fountain “dances” to hit songs from sunset until midnight.
– They undertook training first at Paramotor Desert Adventure on January 12 to test out their brakes and motors with technician Ramon Lopez finally arriving after being held up by the heavy snow in Madrid.
– Training was crucial for the challenge of flying during the night with low visibility as safety director Alan Gayton ensured they had a reserve parachute in case of a technical issue with the main parachute. Llorens and Goberna also had to study the movement of the water with great precision in order not to get caught up in the jets of water
– Flying over water, it was also mandatory to have a lifejacket with rescue boats, jet skis and divers on hand which came handy when Goberna suffered a technical malfunction on the first January 14 practice run.
– After repairs long into the night, they returned to Paramotor Desert Adventure to test out the motors again before completing the stunning flight on January 15 with Llorens and Goberna performing in harmony.
– Llorens, 38, revealed: “As soon as we got the opportunity, we wanted to fly there. We needed to know the area really well beforehand and we needed to know how to ‘play’ with the fountain – this was new for us. Such strong streams of water shooting 100 metres up is a lot, so we had to be really prepared.”
– Goberna, 26, explained: “The motor wasn’t flying so good because, prior to arriving in Dubai, it was last used in Europe at high altitude. I needed to adjust the carburettor in the air inside the motor. In the first practice flight over the water, I broke one propeller. I really couldn’t understand what was happening and then another one broke. Eventually, a backup motor was required. After a long journey, the final result was beautiful! The team worked incredibly hard to make it.”
– Llorens added: “The highlight for me was playing between the super shooters with Rafael, because it’s something we’ve never done before; it felt really new and really powerful.”
EU sets itself jobs, training and equality targets for 2030
By Jan Strupczewski
BRUSSELS (Reuters) – The European Commission on Thursday announced goals for the 27-nation bloc to reduce poverty, inequality and boost training and jobs by 2030 as part of a post-pandemic economic overhaul financed by jointly borrowed funds.
The EU executive arm said the European Union should boost employment to 78% in 2030 from 73% in 2019, halve the gap between the number of employed women and men and cut the number of young people neither working nor studying to 9% from 12.6%
“With unemployment and inequalities expected to increase as a fallout of the pandemic, focusing our policy efforts on quality job creation, up- and reskilling and reducing poverty and exclusion is therefore essential to channel our resources where they are most needed,” the commission said.
The goals, which will have to be endorsed by EU leaders, also include an increase in the number of adults getting training every year to adapt to the EU’s transition to a greener and more digitalised economy to 60% from 40% now.
Finally, over the next 10 years, the EU should reduce the number of people at risk of poverty or social exclusion by 15 million from 91 million in 2019.
“These three 2030 headline targets are deemed ambitious and realistic at the same time,” the commission said.
The goals are part of the EU’s set of 20 social rights, agreed on in 2017, to make the EU more appealing to voters and counter eurosceptic sentiment across the bloc.
They say everybody has the right to quality education throughout their lives and that men and women must have equal opportunities in all areas and be paid the same for work of equal value.
The unemployed have the right to “personalised, continuous and consistent support”, while workers have the right “to fair wages that provide for a decent standard of living”.
(Reporting by Jan Strupczewski; Editing by Nick Macfie)
UK aero-engineer Meggitt eyes return to growth after pandemic slump
LONDON (Reuters) – British engineer Meggitt said that it could return to profit growth in 2021 provided there are no further lockdowns, despite a weakening in the struggling aviation market at the end of 2020 and early this year.
Pandemic restrictions halted much flying globally last year and forced plane makers Boeing and Airbus to cut production rates, dragging down suppliers like Meggitt, which makes and services parts for such aircraft.
Meggitt’s underlying operating profit plunged by 53% to 191 million pounds ($267 million) in 2020, it said on Thursday, despite continued growth in its defence business which makes parts for military jets and accounts for about 45% of the business.
Meggitt, however, said it expected air traffic to recover in the second half of the year which would help it return to profit growth over the year, although its guidance for flat revenue disappointed analysts who had expected growth of 6%.
Meggitt’s Chief Executive Tony Wood said in November that he had expected flying to start to recover by Easter, but new variants have led to more restrictions and delayed the recovery.
“It has gone back a couple of months… it’s now very much in the summer,” Wood said of the recovery in an interview on Thursday.
Further in the future, Meggitt is positioning itself for the move to lower emissions flying, and its sensors and electric motors will be used on electric urban air mobility platforms, such as flying taxis, and in hybrid aeroplanes being developed.
But Meggitt said new tax breaks announced in Britain’s annual budget on Wednesday aimed at encouraging investment would not change its plans.
“Yes, it will be a benefit. Are we looking at any acceleration as a result specifically of that? Not really,” Woods said.
Shares in Meggitt were down 1% to 427 pence at 0943 GMT. The stock has risen by 50% since news of a COVID-19 vaccine last November, but is still down 23% on where it was pre-pandemic.
($1 = 0.7165 pounds)
(Reporting by Sarah Young; Editing by Alistair Smout and Susan Fenton)
Cannon Wealth Solutions Discusses The Need to Rebalance Portfolios and Monitor Risk
By Robert Cannon, the CEO of Cannon Wealth Solutions. The world in 2021 is significantly different after a year of...
Five ways to mitigate the risk of AI models
By Dave Trier, VP of Product at ModelOp In recent years, the banking industry has been at the forefront of...
Honda’s part self-driving Legend a big step for autonomous tech
TOKYO (Reuters) – Honda Motor Co Ltd on Thursday unveiled a partially self-driving Legend sedan in Japan, becoming the world’s...
Airbus to avoid redundancies in Germany, France, Britain
BERLIN (Reuters) – Airbus will make no forced redundancies in France, Germany and Britain, the European planemaker said on Thursday,...
Duo glide around world’s largest fountain in Dubai
Paragliders Llorens and Goberna take magical flight above the Palm Fountain. Horacio Llorens and Rafael Goberna defied gravity to perform...