Stockholders v Great Wolf Resorts Inc.
Stockholders File Lawsuit Against Great Wolf Resorts Inc.
A class action has been filed against Great Wolf Resorts Inc. (WOLF), certain of its officers and directors by stockholders who purchased the company's common stock between December 14, 2004 and July 28, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
According to a press release dated November 22, 2005, the complaint alleges that defendants' registration statements issued in connection with the Company's 2004 Initial Public Offering ("IPO") contained untrue statements of material fact. According to the complaint, at the root of these issues was the fact that the Company provided misleading, unreliable and unpredictable quarterly and annualized guidance based on its preferred non-GAAP EBITDA measure. Since defendants' EBITDA number was allegedly unreliable, both the Company's business prospects and in fact the value of the underlying business was in doubt to the extent this defective measure was used for valuation purposes to convince investors to buy the Company's stock during the IPO. The complaint was filed today alleging that during the Class Period, Great Wolf and certain individual defendants violated provisions of the federal securities laws (Securities Act of 1933 and the Securities Exchange Act of 1934).
The complaint further alleges that on or around July 28, 2005, investors' interests drowned as they learned the true magnitude of the Company's earnings shortfall and its cause - the alleged unreliability of defendants' EBITDA projections. Worse, analysts concluded that defendants were fully aware of the true magnitude of the earnings miss when they were out marketing clients at the end of June but failed to publicly disclose the materiality of the problem at that time. According to the Associated Press, analysts point to the company's inability to handle the increased competition, saying it contributed to other problems, such as a second-quarter earnings miss and questions about the company's internal controls. On the news of July 28, 2005, the price of the Company's stock plunged $6.12 to $13.65, on extremely heavy volume of 6.0 million shares. The price has continued to decline since July and today traded at $8.79.
If you bought Great Wolf Resorts Inc. securities between December 14, 2004 and July 28, 2005, inclusive, and would like to obtain information about the Great Wolf Resorts Inc. lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.
