Robbins LLP: La Quinta Holdings, Inc. (LQ) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that a class action complaint was filed against La Quinta Holdings, Inc. (NYSE: LQ) in the U.S. District Court for the Southern District of New York. The plaintiff brings the complaint on behalf of all purchasers of La Quinta securities pursuant to the company’s secondary public offering (“SPO”) on March 24, 2015, as well as on behalf of the purchasers of La Quinta securities between February 25, 2015 and September 17, 2015, for alleged violations of the Securities Exchange Act of 1934 by La Quinta’s officers and directors. La Quinta owns, operates, and franchises select-service hotels under the La Quinta brand.
La Quinta Accused of Filing a Misleading Registration Statement
According to the complaint, on March 13, 2015, La Quinta filed with the U.S. Securities and Exchange Commission its registration statement for the SPO, and on March 25, 2015, it filed the prospectus, offering to register for sale 23,862,500 shares of the company’s common stock owned by Blackstone at a price of $23.71 per share. Blackstone sold 40% of its common stock holdings in La Quinta to the public in the SPO for net proceeds of approximately $550.8 million. The complaint alleges that the registration statement failed to disclose known trends, events, and uncertainties that were reasonably likely to have a material effect on the company’s operating results, including: (i) declining customer demand in La Quinta’s key Texas market; (ii) on-going disruptions caused by the transitioning of the company’s call center operations; and (iii) declining customer demand and market share losses due to outdated La Quinta facilities, necessitating that the company make significant capital expenditures and undergo operational disruptions.
The complaint further alleges that La Quinta failed to disclose material adverse facts about the company’s business and future financial prospects. Specifically, La Quinta allegedly overstated the amounts buyers were willing to pay for certain of its properties. On July 29, 2015, La Quinta announced that the company’s earnings were adversely affected by a $4 million loss on the sale of a property and an approximate $42 million impairment charge associated with the potential sale of 24 owned company hotels. Then, on September 17, 2015, La Quinta announced it had further reduced its 2015 financial guidance and that its President and Chief Executive Officer had stepped down from his leadership positions in the company. On this news, La Quinta stock declined more than 15% to close at $16.05 per share on September 18, 2015.
La Quinta Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.