from the canadian national post 129 Nov 2009 15:15
Kim Orr has filed a class-action suit against Western Coal Corp. and three of its insiders, the chief executive and two directors. The 22-page suit, which has not yet been certified, seeks $220-million in damages, of which $20-million is for punitive damages. Western Coal said it "believes these allegations are without merit and intends to vigorously defend them as well as the plaintiff's attempt to obtain court approval to proceed with the action. "The suit covers Western Coal investors who bought or sold shares over the period Nov. 14, 2007 to Dec. 10, 2007. On the earlier date, Western Coal announced its second-quarter results and in the release said it did not expect to have sufficient funds in the near term to meet its financial obligations as they became due. "The Company will require additional capital from its major shareholder and external sources," said the release, adding it had been successful in raising additional capital in the past, "and management believes that these funds will be again available in the future." Those two pieces of news helped drive the share price down to 47¢ from $1.75 a share. One week later, Western Coal announced it had entered into a financing agreement with Audley European Opportunities Fund, an investment fund. At the time, Audley owned about 29% of Cambrian Mining, which in turn owned about 42% of Western Coal. Western Coal spoke of raising up to $40-million from Audley. Over the next two weeks more