NEW YORK, NY / ACCESSWIRE / May 28, 2019 / Pomerantz LLP announces that a class action lawsuit has been filed against BrightView Holdings, Inc. ("BrightView" or the "Company") (NYSE: BV) and certain of its officers and directors. The class action, filed in United States District Court, United District Court, Eastern District of Pennsylvania, and indexed under 19-cv-01610, is on behalf of a class consisting of all persons and entities, other than Defendants and their affiliates, who purchased or otherwise acquired BrightView common stock pursuant and/or traceable to the Company's initial public offering completed on or around July 2, 2018 (the "IPO"), seeking to recover compensable damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 11 and 15 of the Securities Act of 1933 (the "Securities Act"). The claims in this action arise from the materially misleading Registration Statement and Prospectus (defined below) (collectively, the "Offering Documents") issued in connection with the IPO.
If you are a shareholder who purchased BrightView securities pursuant and/or traceable to the Company's IPO, you have until June 14, 2019, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
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BrightView was founded in 1939 and is headquartered in Plymouth Meeting, Pennsylvania. The Company provides commercial landscaping services in the United States, operating through two segments, Maintenance Services and Development Services.
On or around July 2, 2018, BrightView completed its IPO, in which the Company issued and sold 24,495,000 shares of common stock at an offering price of $22.00 per share, generating net proceeds of approximately $501.2 million after deducting underwriting discounts and commissions and other offering expenses.
The complaint alleges that the defendants made materially false and misleading statements in the Offering Documents concerning the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) a material portion of BrightView's contracts were underperforming and/or represented undesirable costs to the Company; (ii) as a result of the foregoing, BrightView would implement a "managed exit" strategy to end its low margin and non-profitable contracts with customers; (iii) this "managed exit" strategy would negatively impact BrightView's future revenue throughout 2018, and would continue to do so well into fiscal year 2019; and (iv) as a result, the Offering Documents were materially false and/or misleading and failed to state information required to be stated therein.
On August 8, 2018, after market-close, BrightView issued a press release announcing its financial and operating results for the third quarter of 2018, ended June 30, 2018. Despite reporting "strong third quarter results" and "record revenues," the Company reported that "[r]evenues from the Development Services segment declined 5.7%" compared to the prior year "due to winding down production on certain large projects that reached substantial completion during the quarter, coupled with the timing of commencing work on new projects."
The following day, on August 9, 2018, BrightView filed its quarterly report for the same period with the Securities and Exchange Commission ("SEC"), reiterating the results previously announced in its earlier press release. Therein, the Company disclosed that its Maintenance Services revenue was negatively impacted by its "Managed Exit" strategy. The Managed Exit strategy was Brightview's purported corporate strategy to allow certain "underperforming contacts" to expire upon maturity or renegotiate the contracts to provide the Company with more favorable terms. Critically, this was the first time the Company disclosed that it held "underperforming" customer contracts.
On this news, BrightView's common stock price fell $2.30 per share, or over 10%, to close at $19.90 per share on August 9, 2018, on exceptionally heavy trading volume. This represented a decrease of nearly 10% from the IPO price. BrightView's common stock price continued to fall by an additional $3.53 per share over the following three trading sessions to close at a low of $16.37 per share on August 14, 2018, or approximately 25.6% below the IPO price.
The extent of the Company's "underperforming contracts" was further revealed on November 27, 2018, when BrightView issued a press release reporting its financial and operating results for the fourth quarter and fiscal year 2018. Therein, the Company revealed that for the fourth quarter and full year, its Managed Exit strategy offset its Maintenance Services revenue by 2.6% and 1.6%, respectively. Additionally, BrightView disclosed that its Managed Exit strategy would result in a decline in revenue of $15 to $25 million over the course of full year fiscal 2019.
The following day, BrightView filed its annual report for the fiscal year ended September 30, 2018 with the SEC, reiterating the financial and operating results reported in its earlier press release. The Company elaborated on the extent of its underperforming contracts, disclosing that Net Service revenues for the twelve months ended September 30, 2018 of $2,353.6 million, were negatively impacted "by a $23.1 million decrease as a result of the Company's managed exit strategy surrounding underperforming contracts."
On November 28, 2018, BrightView also hosted a conference call with investors and analysts to discuss the Company's financial and operating results. On that call, BrightView's Chief Executive Officer ("CEO") Andrew V. Masterman disclosed that certain of the Company's contracts not only had "no margin", but in fact were "under water".
Then, on February 7, 2019, BrightView issued a press release announcing its financial and operating results for the first quarter 2019, ended December 31, 2018. In the press release, CEO Masterman attributed the Company's disappointing financial and operating results to, interalia, the Company's "strategic Managed Exit initiative and other operating conditions that we highlighted in our guidance on our November 2018 earnings conference call, as well as a slow start to the season for our snow removal services." Additionally, in the Company's quarterly report filed with the SEC that same day, the Company advised investors that the underperforming contracts part of the Managed Exit strategy accounted for a year-over-year quarterly decline of $10.8 million in landscape services revenues.
Later that day, on February 7, 2019, the Company held an earnings conference call with investors and analysts. On that call, Defendant Masterman warned investors that Company's underperforming contracts comprising its Managed Exit strategy accounted for a $23.1 million drop in revenue for full year fiscal 2018, and the Company expected a loss in revenue of over $25 million for 2019.
On this news, BrightView's common stock price declined $1.51 per share, or over 10%, to close at $13.23 per share on February 7, 2019, representing a decline of nearly 40% from the IPO price. The price of BrightView's common stock continued to fall by an additional $0.48 per share, or 3.6%, to close at a low of $12.75 per share on February 8, 2019, representing a total decline of 42% from the IPO price.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
SOURCE: Pomerantz LLP
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