Wednesday, October 5, 2011

GT Advanced Technologies suits wind down

By James M. Connolly

A pair of class-action stockholder suits against solar manufacturing equipment maker GT Advanced Technologies are drawing to a close with a federal judge delivering final approval of a settlement that will pay major stockholders and their attorneys $10.5 million.

Stockholders, led by the Arkansas Public Employee Retirement System, had sued the Merrimack, N.H., company — until recently known as GT Solar International Inc. — in 2008, and agreed on a proposed settlement in March of this year. The case, involving state and federal suits in New Hampshire, centered on GT’s half billion dollar initial public offering in 2008, with stockholders claiming that GT’s pre-IPO documentation failed to disclose a troubled relationship between GT and a major customer, LDK Solar. According to the lead law firm on the plaintiff’s side, Cohen Milstein Sellers & Toll PLLC of Washington D.C., LDK accounted for 62 percent of GT’s sales in 2008. Just a day after the IPO was completed, LDK signed a major contract with GT competitor JYT Corp. of China, and GT’s stock fell 11.6 percent, according to the law firm.

The suit charged that GT (Nasdaq: GTAT) should have disclosed the risk of losing JYT as a customer.

Under the settlement, GT admitted no liability and is on the hook for only $1 million of the $10.5 million total, with insurers paying the balance.

According to a report in the New Hampshire Business Review, the stockholder payout is likely to come in the spring, with almost $3 million going to attorney fees and expenses, and with small stockholders receiving nothing.

In August, GT said it had acquired Confluence Solar Inc. of Missouri for up to $80 million. The deal starts with a $60 million cash payment for Confluence and includes a potential $20 million earnout based on Confluence achieving financial and technical milestones through GT’s fiscal year 2013.