Billions of dollars evaporated in an instant when Höegh LNG Partners collapsed on the New York Stock Exchange after a massive dividend cut. Now both the shipping company and several Höegh dignitaries have been sued for misleading their shareholders.
Two shareholders in gas company Höegh LNG Partners have sued the company, as well as some past and current presidents and board members, for stock fraud.
This came from the quarterly report of the company’s principal owner, Höegh LNG, published on Thursday of this week. The lawsuit was filed in a New Jersey district court in October and November.
Prosecutors claim that the company failed to provide the market with important information before drastically cutting the quarterly dividend per share from NOK 3.9 to less than one on July 27 this year.
The share fell above 64 percent when the market opened the next day, and later fell another 24 percent. Values of NOK 3.8 billion have evaporated.
“Höegh LNG Partners believes the allegations are baseless, and intends to vigorously defend itself against them,” the report said.
– We have no further comment, Höegh LNG Partners’ CFO and Acting CEO, Håvard Furu, tells E24.
The ship’s owner, Morten W. Hoegh, previously represented the owner’s family on the board of Höegh LNG Partners, but resigned just weeks before the earnings were cut.
Former CEO Sveinung Støhle announced his resignation in mid-October. Foro does not want to reveal who has been prosecuted.
Have any financial claims been filed in connection with the lawsuit?
– No, says Foro.
I had a problem with the loan contract and shipping
Founded by the Höegh LNG Group in 2014, Höegh LNG Partners owns and operates four gas transport vessels.
The business model revolves around attracting appropriate financing through the distribution of fixed dividends from long-term natural gas shipping contracts.
The company is organized as a limited partnership, a form of corporation that has long been popular with US investors due to tax advantages, and has been previously used by, among others, John Fredriksen Seadrill and Tor Olav Trøim’s Golar LNG.
The unexpected dividend cut this summer was partly explained by the fact that the shipping company struggled to refinance the LNG ship LNG, and therefore had to save out of its own money.
The Lampung tenant refused to sign the documents needed to secure the new credit facility, and then attempted to terminate the entire lease.
Consequently, alternative financing had to be secured before the current loan matured at the end of September, and Höegh LNG Partners warned that this short deadline would provide terms worse than those originally negotiated.
In addition, the announcement stated that parent company Höegh LNG Holdings announced that it will not extend its credit limit to the $85 million “partnership” after the January 2023 due date.
“In light of these factors, as well as current conditions in the FSRU (type of cargo ship, editor’s note) market that may increase renegotiation risks, the Board believes that the company should use internally generated cash flow to reduce debt levels and strengthen the balance sheet.” . That was in the message.
Höegh LNG will gobble up completely – avoids the strict Norwegian admission requirements
On the way to the stock exchange with a new company
US law firm Levi & Korsinsky is now looking for more participants in a class action lawsuit against Höegh LNG Partners, and is encouraging everyone who bought shares between August 19, 2019 and July 27, 2021 to register.
This is the period when the plaintiffs believe that the shipping company has provided false or misleading information about its operations, operations and future prospects.
“The Covid-19 pandemic was not the sole or primary cause of the company’s problems in Indonesia. In 2019, before the pandemic, there was already very little demand for the company’s gas,” said the lawsuit, which was reproduced in Yahoo Finance.
The court battle in the USA comes as the Norwegian shipping family Høegh prepares to list car shipping company Höegh Autoliners on Euronext Growth.
In a statement on Friday, Höegh Autoliners confirmed that plans are moving forward, and expects the stock market bell to ring on November 29.
The shipping company is costing NOK 2.8 billion up front for a planned capital increase of just over NOK 1 billion.
Received heavy criticism after forced redemption
This spring, Höegh LNG disappeared from the Oslo Stock Exchange after a controversial forced redemption by other shareholders of the Høegh family and major US bank Morgan Stanley.
The case caused outrage because Høegh and Morgan Stanley used a transaction structure called “merging,” meaning that it only needed to accept two-thirds to be able to forcibly redeem the rest.
For Norwegian companies, a 90 percent requirement applies, but Höegh LNG can circumvent this because it is registered in Bermuda.
Private investor and former director of Skagen, Christian Valens, was among those who responded, calling the maneuver a theft of minority owners’ assets.
– Valens said they circumvent regulations by calling it a merger, among other things.
The Höegh family and Morgan Stanley Höegh gobble up LNG: – straight flyover
Would you invest in Höegh Autoliners?
“I haven’t seen much of it, but I signed up for an investor presentation next week, and I’ll listen to the message,” Valnes tells E24.
– I was reasonably bothered by the way Höegh LNG was withdrawn from the exchange, and thought the price quoted was much lower than the real values, says Valens.
– Do you think that the case has weakened the confidence of the Hoegh family in the Norwegian investor community?
– You almost have to ask the Norwegian investor community about it. But I think it was corporate mismanagement, and my book obviously causes many flaws when you approach an issue in this way, says Valens.
When the company was criticized in March, Chairman Morten W. Hoegh noted that all relevant rules had been followed, and that outside legal and financial advisors concluded the offer was “fair”.
Morten W. Høegh has not yet responded to an E24 inquiry about the lawsuit against Höegh LNG Partners.
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