NexCen Troubles Multiply
Home & Textiles Today Staff -- Home Textiles Today, July 14, 2008
Alleging "false and misleading" statements by NexCen Brands executives, a law firm based here has filed a class action complaint in the U.S. District Court for the Southern District of New York on behalf of purchasers of NexCen common stock.
The complaint, filed by Cohen, Milstein, Hausfeld & Toll, specifically cites "the omission of critical information regarding the existence of an accelerated-redemption feature in the loan the company used to finance its acquisition of the Great American Cookie Company, which resulted in a lack of liquidity so extreme as to cause questions about the company's ability to continue to operate."
As defendants, the complaint names NexCen; its former chairman David S. Oros; president and ceo Robert W. D'Loren; and former cfo David B. Meister. It alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, claiming that "statements made during the class period by NexCen and its executives were materially false and misleading…"
The law firm said that when NexCen released information on the accelerated-redemption clause on May 19, its shares fell by more than 77%. Purchasers of the stock from May 10-19, 2008 are qualified to join in the suit, the firm said.
In other news, NexCen on July 9 received notice from Nasdaq that its stock would be delisted if it does not trade at $1 per share or above for at least 10 consecutive days between now and Jan. 5, 2009.
This is the 180-period Nasdaq customarily grants upon filing a warning of delisting. NexCen shares traded below $1 for the last 30 consecutive business days prior to the notice.
NexCen indicated it will take all suitable measures to remain listed on the Nasdaq exchange.
Meanwhile, Bank of America has extended a July 9 service deadline with NexCen to July 23, NexCen reported in a filing with the Securities and Exchange Commission. The company's principal commercial bank, BoA is preparing to terminate the deposit agreements and other treasury management services that it provides to NexCen — which said it "has been in active discussions with Bank of America to maintain the deposit control agreements."
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