A class action lawsuit has been initiated in the United States District Court against La Quinta Holdings Inc (NYSE:LQ) after being sued by Robbins Geller Rudman & Dowd LLP. Robbins Geller was also acting on behalf of all those who purchased the ordinary stock of La Quinta pursuant to the company’s secondary public offering (SPO) between February 25, 2015, and September 17, 2015.
The charges have been directed against La Quinta, some its officers and directors, The Blackstone Group L.P (NYSE:BX) as well as lead underwriters of the SPO. They are being charged with infringement of the Securities Act and/or the Exchange Act. La Quinta is the principal owner, operator, and franchisor of select-service hotels which mainly serve the midscale and upper-midscale markets.
The main charge is that the Registration Statement and Prospectus issued in connection with the SPO was not truthful since various material trends and uncertainties were not disclosed. The trends and uncertainties outline included:
- The diminishing customer demand in La Quinta’s key Texas market
- An on-going interference resulting from the transitioning of the company’s call center operations
- Declining customer demand and market share losses due as a result of La Quinta’s old-fashioned facilities.
La Quinta needed major restoration whereby the company would have to make considerable capital expenditures. The complaint further indicates that the defendants did not reveal material facts about the Company’s true financial condition, business and projection.
Financial records show that La Quinta’s common stock declined approximately 3.5% as of July 30, 2015, which was occasioned by a $4 million loss on the sale of a property and a further $42 million impairment charge associated with the potential sale of 24 company-owned hotels.
A further 15% decline occurred on September 18, 2015, as a result of the stepping down of the company’s President and CEO through a mutual agreement with the company’s Board of Directors.
Through Robbins Geller, the plaintiff is now pursuing recoverable damages on behalf of all purchasers of La Quinta regular stock.