(CN) - Shareholders say Spanish energy company Abengoa misled investors when its CEO asserted the company had no plans to "tap the capital markets," then announced a plan to raise $600 million Euros three days later.
Michael Francisco filed a class action against Abengoa, CEO Santiago Seage, and three other corporate executives in New York federal court.
Abengoa is a Spanish multinational corporation specializing in sustainable energy technology that trades on the NASDAQ.
On Monday, the company announced it was selected to build the Tees Renewable Energy Plant, to be located in the Port of Teesside, U.K. When completed, it will be the largest biomass combined heat and power plant in the world, supplying at least 600,000 households with renewable energy.
The same day, shareholders filed a lawsuit accusing Abengoa of having "misrepresented the liquidity of the company's balance sheet in corporate reports filed with the SEC and in conference calls with financial analysts."
In a earnings conference call held on Friday, July 31, 2015, Abengoa lowered its cash flow guidance and told analysts that it planned to divest 400 million euros worth of assets in order to reduce its corporate debt.
CEO Santiago Seage allegedly told call participants that "the company has no plan to ... tap the capital markets in any manner."
But on Monday, Abengoa abruptly reversed course, and announced a share issuance plan to raise 650 million euros, in addition to an asset divestiture of 500 million euros - more than investors were told on Friday.
"As a result of the news, the price of Abengoa's ADS plunged over $5 per share, or 46 percent, from its closing price of $11.06 on July 31, 2015, to close at $6.00 on August 4, 2015 on unusually heavy trading. This represents an $8.1 billion loss in market cap in the span of two trading days following the unfavorable news," according to the complaint.
On Thursday, Abengoa traded lower at $5.14 per share. In September 2014, Abengoa traded at a high of $30.75.
Shareholders are represented by Adam Apton with Levi & Korsinsky.