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CLASS ACTION COMPLAINT
GLANCY BINKOW & GOLDBERG LLP
Lionel Z. Glancy
Robert V. Prongay
Casey E. Sadler
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
LAW OFFICES OF HOWARD G. SMITH
Howard G. Smith
3070 Bristol Pike, Suite 112
Bensalem, PA 19020
Telephone: (215) 638-4847
Facsimile: (215) 638-4867
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PLAINTIFF, Individually and on Behalf of
All Others Similarly Situated,
Plaintiff,
v.
AMIRA NATURE FOODS LTD, KARAN
A. CHANANA, and BRUCE C. WACHA,
Defendants.
Case No. DRAFT
CLASS ACTION COMPLAINT FOR
VIOLATIONS OF THE FEDERAL
SECURITIES LAWS
JURY TRIAL DEMANDED
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Plaintiff (“Plaintiff”), by and through his attorneys, alleges the following upon
information and belief, except as to those allegations concerning Plaintiff, which are alleged
upon personal knowledge. Plaintiff’s information and belief is based upon, among other things,
his counsel’s investigation, which includes without limitation: (a) review and analysis of
regulatory filings made by AMIRA NATURE FOODS LTD (“Amira” or the “Company”), with
the United States (“U.S.”) Securities and Exchange Commission (“SEC”); (b) review and
analysis of press releases and media reports issued by and disseminated by Amira; and (c) review
of other publicly available information concerning Amira.
NATURE OF THE ACTION AND OVERVIEW
1. This is a class action on behalf of purchasers of Amira securities between August
26, 2013 and February 8, 2015, inclusive (the “Class Period”), seeking to pursue remedies under
the Securities Exchange Act of 1934 (the “Exchange Act”).
2. Amira is a global provider of branded packaged Indian specialty rice, with sales in
over 60 countries. The Company sells Basmati rice, a premium long-grain rice grown only in
certain regions of the Indian sub-continent, under its flagship Amira brand as well as under other
third party brands. Amira sells its products through a broad distribution network in both the
developed and emerging markets. The Company’s global headquarters are in Dubai, United
Arab Emirates, and it also has offices in India, Malaysia, Singapore, Germany, the United
Kingdom, and the United States.
3. On February 9, 2015, Prescient Point Research Group published a research report
(the “Prescient Report”) about Amira alleging fraudulent activities. The Prescient Report
alleged, among other things, that Amira significantly inflated its international Basmati rice
revenues in fiscal years 2013 and 2014 and that over 50% of the Company’s consolidated sales
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could be fabricated. Additionally, the Prescient Report allegedly identified many undisclosed
related party entities and transactions that could be used to manipulate the routing of funds. The
Prescient Report also alleged that the Company intends to transfer $30 million of the $225
million newly raised debt capital to a related party in a sham real estate transaction.
4. On this news, shares of Amira declined $3.45 per share, nearly 26%, to close on
February 9, 2015, at $9.95 per share, on unusually heavy volume.
5. Throughout the Class Period, Defendants made false and/or misleading
statements, as well as failed to disclose material adverse facts about the Company’s business,
operations, and prospects. Specifically, Defendants made false and/or misleading statements
and/or failed to disclose: (1) that the Company was overstating its international Basmati revenue;
(2) that, as a result, the Company’s consolidated sales revenues were also overstated; (3) that the
Company was engaged in multiple undisclosed related party transactions; and (4) that, as a result
of the foregoing, Defendants’ statements about Amira’s business, operations, and prospects,
were false and misleading and/or lacked a reasonable basis.
6. As a result of Defendants’ wrongful acts and omissions, and the precipitous
decline in the market value of the Company’s securities, Plaintiff and other Class members have
suffered significant losses and damages.
JURISDICTION AND VENUE
7. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17
C.F.R. § 240.10b-5).
8. This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).
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9. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and
Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the
alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts
charged herein, including the preparation and dissemination of materially false and/or misleading
information, occurred in substantial part in this Judicial District.
10. Amira is a global provider of branded packaged Indian specialty rice, with sales in
over 60 countries. The Company sells Basmati rice, a premium long-grain rice grown only in
certain regions of the Indian sub-continent, under its flagship Amira brand as well as under other
third party brands. Amira sells its products through a broad distribution network in both the
developed and emerging markets. The Company’s global headquarters are in Dubai, United Arab
Emirates, and it also has offices in India, Malaysia, Singapore, Germany, the United Kingdom,
and the United States.
PARTIES
11. Plaintiff, as set forth in the accompanying certification, incorporated by reference
herein, purchased Amira common stock during the Class Period, and suffered damages as a
result of the federal securities law violations and false and/or misleading statements and/or
material omissions alleged herein.
12. Defendant Amira is an British Virgin Islands corporation with its principal
executive offices located at 29E, A.U. Tower, Jumeirah Lake Towers, Dubai, United Arab
Emirates.
13. Defendant Karan A. Chanana (“Chanana”) was, at all relevant times, Chief
Executive Officer (“CEO”) and a director of Amira.
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14. Defendant Bruce C. Wacha (“Wacha”) was, at all relevant times, Chief Financial
Officer (“CFO”) of Amira.
15. Defendants Chanana and Wacha are collectively referred to hereinafter as the
“Individual Defendants.” The Individual Defendants, because of their positions with the
Company, possessed the power and authority to control the contents of Amira’s reports to the
SEC, press releases and presentations to securities analysts, money and portfolio managers and
institutional investors, i.e., the market. Each defendant was provided with copies of the
Company’s reports and press releases alleged herein to be misleading prior to, or shortly after,
their issuance and had the ability and opportunity to prevent their issuance or cause them to be
corrected. Because of their positions and access to material non-public information available to
them, each of these defendants knew that the adverse facts specified herein had not been
disclosed to, and were being concealed from, the public, and that the positive representations
which were being made were then materially false and/or misleading. The Individual
Defendants are liable for the false statements pleaded herein, as those statements were each
“group-published” information, the result of the collective actions of the Individual Defendants.
SUBSTANTIVE ALLEGATIONS
Background
16. Amira is a global provider of branded packaged Indian specialty rice, with sales in
over 60 countries. The Company sells Basmati rice, a premium long-grain rice grown only in
certain regions of the Indian sub-continent, under its flagship Amira brand as well as under other
third party brands. Amira sells its products through a broad distribution network in both the
developed and emerging markets. The Company’s global headquarters are in Dubai, United Arab
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Emirates, and it also has offices in India, Malaysia, Singapore, Germany, the United Kingdom,
and the United States.
Materially False and Misleading
Statements Issued During the Class Period
17. The Class Period begins on August 26, 2013. On this day, Amira issued a press
release entitled, “Amira Nature Foods Ltd Announces First Quarter Fiscal 2014 Financial
Results.” Therein, the Company, in relevant part, stated:
First Quarter Revenue Increased 37.6% to $110.3 Million
First Quarter EBITDA Increased 42.4% to $14.5 Million
Amira Nature Foods Ltd (the “Company”) (NYSE: ANFI), a leading global
provider of packaged Indian specialty rice, today reported financial results for the
first quarter ended June 30, 2013.
First Quarter Financial Highlights:
Revenue increased 37.6% to $110.3 million, compared to $80.2 million in
the first quarter of fiscal 2013
EBITDA increased 42.4% to $14.5 million, compared to $10.2 million
Profit after tax increased 124.5% to $7.3 million, compared to $3.3 million
Basic and diluted earnings per share(1) was $0.21 compared to $0.13
For better quarter-over-quarter comparability, after using 35.7 million
fully diluted shares, adjusted earnings per share was $0.21 compared to
$0.09 in the first quarter of fiscal 2013
Karan A. Chanana, Amira’s Chairman and Chief Executive Officer, stated, “We
are off to a strong start in fiscal 2014. In the first quarter, we generated robust
revenue and EBITDA growth, reflecting the continued strong demand for our
products and successful execution on our business strategy.”
Mr. Chanana continued, “In fiscal 2014, we believe we are positioned to benefit
from the progress we made to our business last fiscal year, including the addition
of new customers in both India and internationally and an expanded geographic
footprint. We recently announced the launch of the Amira Organic business
division, which we expect will enable us to enhance the strength of the Amira
brand product offering and capitalize on the growing global demand for organic
packaged foods for years to come.”
First Quarter Fiscal 2014 Results
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Revenue for the first quarter of fiscal 2014 increased 37.6% to $110.3 million,
compared to $80.2 million for the same period in fiscal 2013. The revenue
increase was primarily due to increased sales volume and prices both in India and
internationally. Revenue in the first quarter of fiscal 2014 for Amira and third
party branded products was 96.0% of total revenue, compared to 95.8% for the
first quarter of fiscal 2013.
Cost of materials including change in inventory of finished goods increased $21.6
million, or 32.8%, to $87.5 million in the first quarter of fiscal 2014 from $65.9
million in the first quarter of fiscal 2013. This increase primarily reflects the
growth in revenue. As a percentage of revenue, cost of material decreased to
79.3% in the first quarter of fiscal 2014, compared to 82.2% in the first quarter of
fiscal 2013, primarily due to improved operating efficiencies and economies of
scale.
EBITDA increased 42.4% to $14.5 million in the first quarter of fiscal 2014,
compared to $10.2 million in the same period last year. A reconciliation of
EBITDA to the IFRS measure of profit after tax is provided in the “Non-IFRS
Financial Measures” section of this release.
Profit after tax for the first quarter of fiscal 2014 increased 124.5% to $7.3
million, compared to $3.3 million in the quarter of fiscal 2013. Basic and diluted
earnings per share(1) was $0.21 compared to $0.13 for the first quarter of fiscal
2013.
For better quarter-over-quarter comparability, after using 35.7 million fully
diluted shares, adjusted earnings per share was $0.21 compared to $0.09 in the
first quarter of fiscal 2013. A reconciliation of adjusted earnings per share to basic
and diluted earnings per share is provided in the “Non-IFRS Financial Measures”
section of this release.
Balance Sheet and Cash Flow Highlights
At June 30, 2013, the Company’s cash and cash equivalents was $32.6 million
and adjusted net working capital was $226.6 million. Net debt (after deducting
cash and cash equivalents) as of June 30, 2013 was $107.7 million. As of June 30,
2013, inventory decreased $20.7 million to $160.8 million from $181.5 million as
of March 31, 2013. As of June 30, 2013, trade receivables were $62.4 million, a
decrease of $4.4 million from $66.8 million as of March 31, 2013. Reconciliations
of adjusted net working capital and net debt to the IFRS measures of working
capital and total current and non-current debt, respectively, are provided in the
“Non-IFRS Financial Measures” section of this release.
Fiscal 2014 Outlook
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The Company reiterates its previously issued guidance and continues to expect
full year fiscal 2014 revenue in the range of $480 million to $507 million and
EBITDA in the range of $62 million to $66 million. This is in line with long-term
guidance previously provided to the investment community in connection with
Amira’s initial public offering. We note that the Company’s guidance is based on
foreign exchange rates as of June 30, 2013 and takes into account the potential
impact of foreign currency fluctuations for the remainder of our fiscal year.
18. On November 11, 2013, Amira issued a press release entitled, “Amira Nature
Foods Ltd Announces Second Quarter Fiscal 2014 Financial Results.” Therein, the Company, in
relevant part, stated:
Second Quarter Revenue Increased 36.1% to $108.0 Million
Second Quarter EBITDA Increased 38.1% to $14.1 Million
Amira Nature Foods Ltd (the “Company”) (NYSE: ANFI), a leading global
provider of packaged Indian specialty rice, today reported financial results for the
second quarter and six months ended September 30, 2013.
Second Quarter Financial Highlights:
Revenue increased 36.1% to $108.0 million, compared to $79.4 million
EBITDA increased 38.1% to $14.1 million, compared to $10.2 million
Profit after tax increased 90.0% to $6.3 million, compared to $3.3 million
Basic and diluted earnings per share (1) was $0.18 compared to $0.09
(All comparisons above are to the second quarter of fiscal 2013)
Karan A. Chanana, Amira’s Chairman and Chief Executive Officer, stated, “We
are pleased to report strong second quarter financial results, as our revenue
increased 36.1% and EBITDA grew 38.1%. Our results reflect our ability to
consistently add new customers in India and internationally, enter new markets as
well as the continued growing demand for our premium product offerings.”
Mr. Chanana continued, “As we begin the second half of fiscal 2014, we are well
positioned to deliver another strong year. Our business continues to benefit from
our successful execution on our strategic initiatives, including our expanding
product portfolio, which includes our recently launched Amira Organic business
division. We have been encouraged by our customers’ responses to our organic
products and are excited about the long-term potential for this segment of our
business. Based on our year-to-date results and outlook for the remainder of the
year, we are reiterating our annual revenue and EBITDA guidance.”
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Second Quarter Fiscal 2014 Results
Revenue for the second quarter of fiscal 2014 increased 36.1% to $108.0 million,
compared to $79.4 million for the same period in fiscal 2013. The revenue
increase was primarily due to increased sales volume both in India and
internationally.
Cost of materials including change in inventory of finished goods increased $20.8
million, or 34.0%, to $82.0 million in the second quarter of fiscal 2014 from
$61.2 million in the second quarter of fiscal 2013. This increase primarily reflects
the growth in revenue. As a percentage of revenue, cost of material decreased to
75.9% in the second quarter of fiscal 2014, compared to 77.1% in the second
quarter of fiscal 2013, primarily due to improved operating efficiencies and
economies of scale.
EBITDA increased 38.1% to $14.1 million in the second quarter of fiscal 2014,
compared to $10.2 million in the same period last year. A reconciliation of
EBITDA to the IFRS measure of profit after tax is provided in the “Non-IFRS
Financial Measures” section of this release.
Profit after tax for the second quarter of fiscal 2014 increased 90.0% to $6.3
million, compared to $3.3 million in the quarter of fiscal 2013. Basic and diluted
earnings per share(1) was $0.18 compared to $0.09 for the second quarter of fiscal
2013.
First Six Months Fiscal 2014 Results
For the first six months of fiscal 2014, net revenue increased 36.8% to $218.3
million, compared to $159.5 million for the same period of fiscal 2013. EBITDA
increased 40.2% to $28.6 million, compared to $20.4 million for the same period
in fiscal 2013. Profit after tax increased 107.2% to $13.6 million, compared to
$6.6 million in the same period in fiscal 2013.
Basic and diluted earnings per share(1) was $0.38 compared to $0.18 for the first
six months of fiscal 2013.
Balance Sheet and Cash Flow Highlights
At September 30, 2013, the Company’s cash and cash equivalents were $46.2
million and adjusted net working capital was $223.2 million. Net debt (after
deducting cash and cash equivalents) as of September 30, 2013 was $102.6
million. As of September 30, 2013, inventory decreased $15.8 million to $165.7
million from $181.5 million as of March 31, 2013. As of September 30, 2013,
trade receivables were $69.5 million, an increase of $2.7 million from $66.8
million as of March 31, 2013. Reconciliations of adjusted net working capital and
net debt to the IFRS measures of working capital and total current and non-
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current debt, respectively, are provided in the “Non-IFRS Financial Measures”
section of this release.
Fiscal 2014 Outlook
The Company reiterates its previously issued guidance and continues to expect
full year fiscal 2014 revenue in the range of $480 million to $507 million and
EBITDA in the range of $62 million to $66 million. This is in line with long-term
guidance previously provided to the investment community in connection with
Amira’s initial public offering. The Company’s guidance is based on foreign
exchange rates as of September 30, 2013.
19. On February 25, 2014, Amira issued a press release entitled, “Amira Nature
Foods Ltd Announces Third Quarter Fiscal 2014 Financial Results.” Therein, the Company, in
relevant part, stated:
Third Quarter Revenue Increased 25.1% to $142.5 Million
Third Quarter EBITDA Increased 29.3% to $17.7 Million
Company Raises Fiscal 2014 Outlook
Amira Nature Foods Ltd (the “Company;” NYSE:ANFI), a leading global
provider of packaged Indian specialty rice, today reported financial results for the
third quarter and nine months ended December 31, 2013.
Third Quarter Financial Highlights :
Revenue increased 25.1% to $142.5 million, compared to $113.9 million
EBITDA increased 29.3% to $17.7 million, compared to $13.7 million
Profit after tax increased 85.5% to $7.7 million, compared to $4.2 million
Basic and diluted earnings per share (1) was $0.20 compared to $0.11
For better quarter over quarter comparability, after using 35.7 million fully
diluted shares, adjusted earnings per share was $0.22 compared to $0.17.
(All comparisons above are to the third quarter of fiscal 2013)
Karan A. Chanana, Amiras Chairman and Chief Executive Officer, stated, Our
strong financial performance in the third quarter highlights the increasing demand
for our premium products, the positive response to our expanding product line,
and our growing geographic footprint. Our successful execution on all aspects of
our business model enables us to increase our revenue by 25.1% and EBITDA by
29.3% in the third quarter.
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Mr. Chanana continued, Based on our year-to-date performance and outlook for
the final quarter, we remain confident in our ability to deliver a record year in
fiscal 2014 and are raising our annual revenue and EBITDA guidance. Our
business will benefit from recently announced key contracts, including the launch
of Amira branded products in Reliance Retail Limited stores across India and our
acquisition of a German branded business of basmati rice. We look forward to
finishing the year on a strong note and well positioned for fiscal 2015.
Third Quarter Fiscal 2014 Results
Revenue for the third quarter of fiscal 2014 increased 25.1% to $142.5 million,
compared to $113.9 million for the same period in fiscal 2013. The revenue
increase was primarily due to increased sales volume and price of Basmati rice
both in India and internationally. Revenue in the third quarter of fiscal 2014 for
Amira and third party branded products was 95.8% of total revenue, compared to
99.0% for the same period in fiscal 2013. Institutional sales in the third quarter of
fiscal 2014 contributed 4.2% of total revenue, compared to 1.0% of total revenue,
for the same period in fiscal 2013.
Cost of materials including change in inventory of finished goods increased $23.7
million, or 28.3%, to $107.4 million in the third quarter of fiscal 2014 from $83.7
million in the third quarter of fiscal 2013. This increase primarily reflects the
growth in revenue. As a percentage of revenue, cost of material increased to
75.4% in the third quarter of fiscal 2014, compared to 73.5% in the third quarter
of fiscal 2013 due to increase in raw material prices.
EBITDA increased 29.3% to $17.7 million in the third quarter of fiscal 2014,
compared to $13.7 million in the same period last year. A reconciliation of
EBITDA to the IFRS measure of profit after tax is provided in the Non-IFRS
Financial Measures section of this release.
Profit after tax for the third quarter of fiscal 2014 increased 85.5% to $7.7 million,
compared to $4.2 million in the quarter of fiscal 2013. Basic and diluted earnings
per share (1) was $0.20 compared to $0.11 for the third quarter of fiscal 2013.
For better quarter over quarter comparability, after using 35.7 million fully diluted
shares, adjusted earnings per share was $0.22 compared to $0.17 in the third
quarter of fiscal 2013. Reconciliations of adjusted earnings per share, to basic and
diluted earnings per share are provided in the Non-IFRS Financial Measures
section of this release.
First Nine Months Fiscal 2014 Results
For the first nine months of fiscal 2014, net revenue increased 31.9% to $360.8
million, compared to $273.4 million for the same period of fiscal 2013. EBITDA
increased 35.8% to $46.2 million, compared to $34.0 million for the same period
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in fiscal 2013. Profit after tax increased 98.8% to $21.4 million, compared to
$10.7 million in the same period in fiscal 2013. Basic and diluted earnings per
share (1) was $0.58 compared to $0.37 for the first nine months of fiscal 2013.
For better quarter over quarter comparability, after using 35.7 million fully diluted
shares, adjusted earnings per share was $0.60 for the first nine months of fiscal
2014 compared to $0.35 for the same period in fiscal 2013. Reconciliations of
adjusted earnings per share, to basic and diluted earnings per share are provided in
the Non-IFRS Financial Measures section of this release.
Balance Sheet and Cash Flow Highlights
At December 31, 2013, the Companys cash and cash equivalents were $34.8
million and adjusted net working capital was $262.9 million. Net debt (after
deducting cash and cash equivalents) as of December 31, 2013 was $125.5
million. The Companys harvest season began in the third quarter in October and
ended in January. During this period, the Company prudently increased inventory
in order to meet expected demand, as of December 31, 2013, inventory increased
$72.5 million to $253.9 million from $181.5 million as of March 31, 2013. As of
December 31, 2013, trade receivables were $74.7 million, an increase of $7.9
million from $66.8 million as of March 31, 2013. Reconciliations of adjusted net
working capital and net debt to the IFRS measures of working capital and total
current and non-current debt, respectively, are provided in the Non-IFRS
Financial Measures section of this release.
Fiscal 2014 Outlook
The Company raises its previously issued guidance and expects full year fiscal
2014 revenue in the range of $507 million to $517 million and EBITDA in the
range of $66 million to $68 million. This is in line with long-term guidance
previously provided to the investment community in connection with Amiras
initial public offering. The Companys guidance is based on foreign exchange rates
as of December 31, 2013.
20. On June 16, 2014, Amira issued a press release entitled, “Amira Nature Foods Ltd
Announces Fourth Quarter and Full Year Fiscal 2014 Financial Results.” Therein, the Company,
in relevant part, stated:
Fourth Quarter Revenue Increased 33.0% to $186.6 Million and Adjusted
EBITDA Increased 45.4% to $26.4 Million
Full Year Revenue Increased 32.3% to $547.3 Million and Adjusted EBITDA
Increased 44.0% to $75.5 Million
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Amira Nature Foods Ltd (the “Company”) (ANFI), a leading global provider of
packaged Indian specialty rice, today reported financial results for the fourth
quarter and full year ended March 31, 2014.
Fourth Quarter Financial Highlights:
Revenue increased 33.0% to $186.6 million compared to $140.2 million
Adjusted EBITDA increased 45.4% to $26.4 million compared to $18.1
million
Adjusted EBITDA margin increased by more than 100 bps to 14.1% of
sales
Adjusted profit after tax increased 97.2% to $16.8 million compared to
$8.5 million
Basic earnings per share(1) was $0.47 compared to $0.24
Adjusted earnings per share was $0.47 compared to $0.24
Fiscal Year 2014 Financial Highlights:
Revenue increased 32.3% to $547.3 million compared to $413.7 million
Adjusted EBITDA increased 44.0% to $75.5 million compared to $52.4
million
Adjusted EBITDA margin increased by more than 100 bps to 13.8% of
sales
Profit after tax increased 98.1% to $38.1 million compared to $19.2
million
Adjusted profit after tax, which excludes non-cash expenses for share
based compensation of approximately $2.9 million, increased 93.2% to
$41.0 million compared to $21.2 million
Basic and diluted earnings per share(1) was $1.04 compared to $0.63
Adjusted earnings per share was $1.14 compared to $0.59
(All comparisons above are to the fourth quarter and fiscal year 2014,
respectively. Non-IFRS financial measures are reconciled in the tables below.)
Karan A. Chanana, Amira’s Chairman and Chief Executive Officer, stated, “We
are very pleased with our performance in the fourth quarter and full year 2014,
where we grew sales dramatically, improved operating margins, nearly doubled
income and made significant investment for continued future growth.”
He continued, “We are focused on a dramatically increasing class of consumers in
our home market, while also exploiting new opportunities around the world to
further grow our business. To bolster our growth in India we established eight
company owned and managed distribution centers in key cities around the country
and plan to add seven more distribution centers by the end of the fiscal 2015 to
further support our success in India.”
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“Internationally, we have made key investments in core regions, including our
acquisition of Basmati Rice GmbH which added to our positions in Germany and
throughout Continental Europe. We continued to invest in the UK, increasing our
marketing spend and building our presence to more than 3,000 distribution points,
and in the US where we have nearly doubled our revenues over the past year.”
Bruce Wacha, Amira’s Chief Financial Officer, added, “The Company had a very
strong fourth quarter and fiscal 2014 performance, reporting yet another record
year. Our revenue grew by more than 30%, our operating margins grew by more
than 100 bps, Adjusted EBITDA increased by approximately 45% and Adjusted
earnings per share grew by nearly 100%. We have continued to invest in future
growth while maintaining a conservative balance sheet of just 2.4x total debt to
Adjusted EBITDA and 2.0x net debt to Adjusted EBITDA.”
Fourth Quarter Fiscal 2014 Results
Revenue for the fourth quarter of fiscal 2014 increased 33.0% to $186.6 million,
compared to $140.2 million for the same period in fiscal 2013. The revenue
increase was primarily due to increased pricing and sales volumes in India and
internationally. Revenue in the fourth quarter also benefited from the inclusion of
Basmati Rice GmbH, which was acquired in January 2014.
Revenue in the fourth quarter of fiscal 2014 for Amira and third party branded
products was $158.3 million up approximately $20 million compared to $138.5
million for the same period in fiscal 2013. Sales to the Company’s institutional
customers were up significantly, contributing $28.3 million in revenue for the
quarter.
Margins also increased due to improved pricing dynamics, operating efficiencies
and economies of scale. Cost of materials including change in inventory of
finished goods were $137.4 million, or 73.7% of sales in the fourth quarter of
fiscal 2014, compared to $109.0 million, or 77.7% of sales in the fourth quarter of
fiscal 2013. Freight, forwarding and handling expenses were $7.5 million, or
4.0% of revenue compared to $5.4 million, or 3.8% of revenue, in the prior year’s
fourth quarter.
Adjusted EBITDA increased 45.4% to $26.4 million in the fourth quarter of fiscal
2014, compared to $18.1 million in the same period last year. Adjusted EBITDA
margin increased by more than 100 bps to 14.1% in the fourth quarter of 2014. A
reconciliation of Adjusted EBITDA to the IFRS measure of profit after tax is
provided in the “Non-IFRS Financial Measures” section of this release.
Adjusted profit after tax for the fourth quarter of fiscal 2014 increased 97.2% to
$16.8 million, compared to $8.5 million in the fourth quarter of fiscal 2014. Basic
earnings per share(1) was $0.47 compared to $0.24 for the fourth quarter of fiscal
2013. A reconciliation of adjusted profit after tax to the IFRS measure of profit
CLASS ACTION COMPLAINT
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after tax is provided in the “Non-IFRS Financial Measures” section of this
release.
Adjusted earnings per share was $0.47 compared to $0.24 in the fourth quarter of
fiscal 2013. Reconciliations of adjusted earnings per share to basic and diluted
earnings per share is provided in the “Non-IFRS Financial Measures” section of
this release.
Fiscal Year 2014 Results
For the full year fiscal 2014, revenue increased 32.3% to $547.3 million,
compared to $413.7 million in fiscal 2013. Adjusted EBITDA increased 44.0% to
$75.5 million, compared to $52.4 million in fiscal 2013 and Adjusted EBITDA
margins increased by more than 100 bps to 13.8%. Profit after tax increased
98.1% to $38.1 million, compared to $19.2 million in fiscal 2013. Adjusted profit
after tax, which excludes non-cash expenses for share based compensation of
approximately $2.9 million, increased 93.2% to $41.0 million, compared to $21.2
million in fiscal 2013. A reconciliation of adjusted EBITDA and adjusted profit
after tax to the IFRS measure of profit after tax is provided in the “Non-IFRS
Financial Measures” section of this release.
Basic and diluted earnings per share(1) for fiscal 2014 was $1.04 compared to
$0.63 each in fiscal 2013. Adjusted earnings per share was $1.14 in fiscal 2014
compared to $0.59 in fiscal 2013. Reconciliations of adjusted earnings per share,
to basic and diluted earnings per share are provided in the “Non-IFRS Financial
Measures” section of this release.
Balance Sheet and Cash Flow Highlights
At March 31, 2014, the Company’s cash and cash equivalents was $36.6 million,
adjusted net working capital was $299.2 million, or 54.6% of sales, compared to
$256.2 million, or 61.9% of sales, in the prior year. Net debt (after deducting cash
and cash equivalents) as of March 31, 2014 was $148.2 million. Net debt to
Adjusted EBITDA was 2.0x, compared to 2.4x at the end of fiscal 2013. As of
March 31, 2014, inventory was $255.0 million, or 46.6% of sales, compared to
$181.5 million, or 43.9% of sales, as of March 31, 2013. As of March 31, 2014,
trade receivables were $80.9 million, or 14.8% of sales, compared to $66.8
million, or 16.1% of sales, in the prior year. Reconciliations of adjusted net
working capital and net debt to the IFRS measures of working capital and total
current and non-current debt, respectively, are provided in the “Non-IFRS
Financial Measures” section of this release.
Fiscal 2015 Outlook
For 2015, the Company expects revenue and Adjusted EBITDA to increase by
more than 20%. The Company maintains its long term outlook for $1 billion in
CLASS ACTION COMPLAINT
15
revenue and $150 million in Adjusted EBITDA as has been previously
communicated to investors as part of its initial public offering. This outlook is
based on current foreign exchange rates.
21. On July 28, 2014, Amira filed its Annual Report with the SEC on Form 20-F for
the 2014 fiscal year. The Company’s Form 20-F was signed by Defendants Chanana and Wacha
and affirmed the results previously announced June 16, 2014.
22. On August 28, 2014, Amira issued a press release entitled, “Amira Nature Foods
Ltd Announces First Quarter Fiscal 2015 Financial Results.” Therein, the Company, in relevant
part, stated:
First Quarter Revenue Grew 25.9 % to $138.8 Million
Adjusted EBITDA Increased 30.9% to $19.1 Million
Amira Nature Foods Ltd (the “Company;” or “Amira” NYSE: ANFI), a leading
global provider of packaged Indian specialty rice, today reported financial results
for its fiscal 2015 first quarter which ended on June 30, 2014.
First Quarter Financial Highlights:
Revenue grew 25.9% to $138.8 million compared to $110.3 million in the
year earlier period
Adjusted EBITDA increased 30.9% to $19.1 million compared to $14.6
million
Adjusted EBITDA margin increased to 13.7% percent of sales compared
to 13.2%
Adjusted profits after tax increased 24.7% to $9.3 million compared to
$7.4 million
Basic earnings per share was $0.25 compared to $0.21
Adjusted earnings per share was $0.26 compared to $0.21
Karan A. Chanana, Amira’s Chairman and Chief Executive Officer, stated, “Our
strong first quarter performance reflects increased demand and a favorable pricing
environment for our products - with gains in our core Indian and Middle East
markets, as well as in developed markets, such as the US, the UK and Continental
Europe where we continue to make inroads in these priority markets. We believe
that fiscal 2015 will be a great year and we expect to meet our growth forecasts as
we expand markets and distribution points around the world.”
CLASS ACTION COMPLAINT
16
Bruce Wacha, Amira’s Chief Financial Officer, added, “We are pleased with the
progress in the first quarter – we grew top line, adjusted EBITDA and profits by
approximately 25% or more, while also increasing margins and improving our
balance sheet. We added to inventory during the quarter providing support for our
future sales growth and simultaneously reduced our trade payables and debt.”
First Quarter Fiscal 2015 Results
Revenue for the first quarter of fiscal 2015 increased 25.9% to $138.8 million,
compared to $110.3 million for same period in fiscal 2014. The revenue increase
was primarily due to continuing increases in sales volume, pricing and mix.
Amira branded and third party branded sales increased by 29.3% to $136.8
million. Revenue from institutional sales fell marginally in dollar terms to $2.0
million from $4.4 million a year ago. Sales in India increased by 20.9% to $55.8
million (an increase of 30.3% in Indian rupees), while non-India or international
sales increased by 29.5% to $83.0 million.
Cost of materials including change in inventory of finished goods increased by
$20.7 million, or 23.7% to $108.2 million in the first quarter of fiscal 2015 from
$87.5 million in the first quarter of 2014, primarily reflecting revenue growth
during that period. As a percentage of revenue, cost of materials including change
in inventory of finished goods decreased to 78.0% in the three months ended June
30, 2014, versus 79.3% in the same period a year ago, due to improved pricing,
operating efficiencies and continued benefit from economies of scale.
Adjusted EBITDA increased by approximately $4.5 million or 30.9% to $19.1
million, with adjusted EBITDA margins increasing by approximately 50 basis
points to 13.7%. Adjusted EBITDA benefited from improvements in cost of
materials including change in inventory of finished goods and freight, forwarding
and handling, which improved by approximately 140 basis points and 240 basis
points as a percentage of sales, respectively. These gains were offset in part by
slight increases in employee benefit costs and other expenses.
Adjusted profit after tax increased by $1.8 million or 24.7% to $9.3 million for
the three months ended June 30, 2014. Adjusted EPS increased by 23.8% to $0.26
per share from $0.21 per share in the year-ago quarter.
A reconciliation of Adjusted EBITDA, Adjust profit after tax and Adjusted EPS is
provided in the “Non-IFRS Financial Measures” section of this release.
Balance Sheet and Cash Flow Highlights
At June 30, 2014, the Company’s cash and cash equivalents was $32.8 million
and adjusted net working capital was $311.1 million. Net debt (after deducting
cash and cash equivalents) as of June 30, 2014 was $150.2 million. As of June 30,
2014, inventories increased $10.7 million to $265.7 million from $255.0 at March
CLASS ACTION COMPLAINT
17
31, 2014, trade receivables were $71.4 million, a decrease of $9.5 million from
$80.9 million, trade payables were $23.7 million, a decrease of $17.5 million
from $41.2 million and total debt was $182.9 million a decrease of $1.9 million
from $184.8 million. Reconciliations of adjusted net working capital and net debt
to the IFRS measures of working capital and total current and non-current debt,
respectively, are provided in the “Non-IFRS Financial Measures” section of this
release.
Fiscal 2015 Outlook
The Company reiterates its previously-issued guidance and expects full-year
fiscal 2015 Revenue and Adjusted EBITDA growth in excess of 20%. This is in
line with long-term guidance previously provided to the investment community.
The Company’s guidance is based on foreign exchange rates as of June 30, 2014
and does not take into account the potential impact of foreign currency
fluctuations for the remainder of the fiscal year.
23. On November 24, 2014, Amira issued a press release entitled, “Amira Nature
Foods Ltd Announces Second Quarter Fiscal 2015 Financial Results.” Therein, the Company, in
relevant part, stated:
Second Quarter Revenue Grew 30.9 % to $141.4 Million
Second Quarter Adjusted EBITDA Increased 39.4% to $19.7 Million
Amira Nature Foods Ltd (the “Company;” or “Amira” NYSE: ANFI), a leading
global provider of packaged Indian specialty rice, today reported financial results
for its fiscal 2015 second quarter which ended on September 30, 2014.
Second Quarter 2015 Financial Highlights versus Second Quarter 2014:
Revenue grew 30.9% to $141.4 million compared to $108.0 million in the
prior year
Adjusted EBITDA increased 39.4% to $19.7 million compared to $14.2
million
Adjusted EBITDA margin increased to 14.0% percent of sales compared
to 13.1%
Adjusted profits after tax increased 66.4% to $10.6 million compared to
$6.3 million
Adjusted earnings per share was $0.29 compared to $0.18
Karan A. Chanana, Amira’s Chairman and Chief Executive Officer, stated, “Our
strong second quarter performance reflects increased demand and a favorable
pricing environment for our products, with strong gains in our core Indian and
CLASS ACTION COMPLAINT
18
Middle East markets, while we continue to make progress in our expansion efforts
throughout developed markets such as the US, UK and Continental Europe.
During the quarter, we leveraged many of our existing relationships with
international retailers, resulting in increased shelf space and volume around the
world and across multiple sales channels. Additionally, we were successful in
expanding our distribution through new partnerships, such as Snapdeal, India’s
largest online marketplace and Asda, a wholly owned division of Walmart.
Importantly, we expect strong growth for the remainder of fiscal 2015, driven by
ongoing distribution gains and market expansion, as we continue to successfully
execute on our strategic initiatives.”
Bruce Wacha, Amira’s Chief Financial Officer added, “Today we reported our
ninth consecutive quarter of double digit revenue and profit growth as a public
company. Revenue, adjusted EBITDA and adjusted earnings per share were all up
in excess of 30% for the quarter driven by strong pricing and double digit volume
gains in our core Amira and third party branded business. Our Basmati and other
specialty rice sales were up significantly, while our more opportunistic
institutional business, as expected, declined from last year’s exceptionally high
levels. We continue to see many opportunities in our home market and around the
world to grow our business and create value for our shareholders.”
Second Quarter Fiscal 2015 Results
Revenue for the second quarter of fiscal 2015 increased 30.9% to $141.4 million,
compared to $108.0 million for same period in fiscal 2014. The revenue increase
was primarily due to increases in sales volume, pricing and mix in Amira branded
and third party branded sales. Amira branded and third party branded sales
increased by $63.4 million or 82.0% to $140.7 million. Revenue from institutional
sales fell to $0.7 million from $30.7 million a year ago. Sales in India increased
by 41.2% to $55.3 million, or up 37.7% in Indian rupees, while sales outside of
India or international sales increased by 25.1% to $86.1 million.
Cost of materials including change in inventory of finished goods increased by
$28.3 million, or 34.6% to $110.3 million in the three months ended September
30, 2014 from $82.0 million in the three months ended September 30, 2013,
primarily reflecting the growth in revenue. As a percentage of revenue, cost of
materials including change in inventory of finished goods increased to 78.0% in
the three months ended September 30, 2014 as compared to 75.9% in the three
months ended September 30, 2013. Cost of materials including change in
inventory of finished goods as a percentage of revenue, was negatively impacted
due to currency exchange fluctuation on revenue which was offset by a foreign
exchange gain based on the Company’s hedging policy. Accordingly, our cost of
materials including change in finished goods as a percentage of Revenue plus
foreign exchange accounting gain/ (loss) (due to hedging of foreign exchange
risk) decreased to 77.3% as compared to 77.8% in same period last year. While
the net impact of all the remaining items was an increase of 40 bps on margins.
CLASS ACTION COMPLAINT
19
Adjusted EBITDA increased by $5.5 million or 39.4% to $19.7 million, with
adjusted EBITDA margins increasing by 90 basis points to 14.0%. Other gains
and (losses) increased to a gain of $2.0 million for the three months ended
September 30, 2014 compared to a loss of $3.6 million during the prior year
period. The $2.0 million gain was primarily driven by a foreign exchange benefit,
resulting from the Company’s hedging policy when the Indian rupee strengthened
against the U.S. dollar. The average exchange rate for the quarter ended
September 30, 2014 was ₹60.61, compared to ₹62.11 in the quarter ended
September 30, 2013.
Adjusted profit after tax increased by $4.3 million or 66.4% to $10.6 million for
the three months ended September 30, 2014. Adjusted EPS increased by 65.2% to
$0.29 per share from $0.18 per share in the prior year. Adjusted profit after tax
and adjusted EPS benefited from a lower effective tax rate of 8.2% for the three
months ended September 30, 2014 compared to 30.1% for the three months ended
September 30, 2013. This was primarily due to a relatively higher contribution of
revenue and corresponding profit from lower tax jurisdictions in the quarter.
A reconciliation of adjusted EBITDA, adjusted profit after tax and adjusted EPS
is provided in the “Non-IFRS Financial Measures” section of this release.
First Six Months of Fiscal 2015 Results
For the first six months of fiscal 2015, revenue increased 28.4% to $280.2
million, compared to $218.3 million for the same period of fiscal 2014. Adjusted
EBITDA increased 35.1% to $38.8 million, compared to $28.7 million for the
same period in fiscal 2014. Adjusted profit after tax increased 43.9% to $19.8
million, compared to $13.8 million in the same period in fiscal 2014.
Adjusted earnings per share were $0.55 compared to $0.39 for the first six months
of fiscal 2014.
Balance Sheet and Cash Flow Highlights
As of September 30, 2014, the Company’s cash and cash equivalents were $25.7
million and adjusted net working capital was $325.3 million. Net debt (after
deducting cash and cash equivalents) as of September 30, 2014 was $158.5
million. As of September 30, 2014, inventories decreased $3.6 million to $251.3
million from $255.0 as of March 31, 2014, trade receivables were $86.5 million,
an increase of $5.6 million from $80.9 million, trade payables were $11.9 million,
a decrease of $29.3 million from $41.2 million and total debt was $184.2 million
a decrease of $0.6 million from $184.8 million. Reconciliations of adjusted net
working capital and net debt to the IFRS measures of working capital and total
current and non-current debt, respectively, are provided in the “Non-IFRS
Financial Measures” section of this release.
CLASS ACTION COMPLAINT
20
Fiscal 2015 Outlook
The Company reiterates its previously-issued guidance and expects full-year
fiscal 2015 revenue and adjusted EBITDA growth in excess of 20%. This is in
line with long-term guidance previously provided to the investment community.
The Company’s guidance is based on foreign exchange rates as of September 30,
2014.
24. On January 28, 2015, Amira filed a Report of Foreign Private Issuer with the SEC
on Form 6-K. Therein, the Company, in relevant part, stated:
On January 28, 2015, Amira Nature Foods Ltd (the “Company”), issued a press
release announcing the offering of $225 Million Senior Secured Second Lien
Notes (the “Notes”) and, concurrent with the closing of the Notes, the Company’s
expectation that it will enter into a new $35 Million Senior Secured Revolving
Credit Facility (the “Revolving Credit Facility”), which the Company expects will
be undrawn at the time of the closing of the Notes. The Revolving Credit Facility
will be secured by first-priority liens on the collateral (other than an escrow
account and certain escrowed funds) that secures the Notes on a second-priority
basis by such collateral. In connection with the offering of the Notes, the
Company disclosed certain information set forth below.
Acquisition of Amira Enterprises
Within a commercially reasonable period of time after the closing of the sale of
the Notes, Amira Nature Foods Ltd (Mauritius), a Mauritius company (“Amira
Mauritius”), will apply $30.0 million of the net proceeds of the Notes as cash
consideration to acquire Amira Enterprises Private Limited (the “Amira
Enterprises Share Purchase”), an Indian company (“Amira Enterprises”), an entity
which owns approximately 86 acres of land in Karnal, India adjacent to 48.2 acres
of land that we have previously purchased and on which we have begun to
construct our new processing and milling facility, including facilities for drying
and storing rice paddy and Basmati rice and for storing and distributing Basmati
rice and other products. Members of the family of our Chairman, Karan A.
Chanana, currently own Amira Enterprises and will receive the proceeds of the
sale to Amira Mauritius. The independent members of the Board of Directors of
Amira Nature Foods Ltd (BVI), a British Virgin Islands (“BVI”) business
company (“ANFI”), have approved this transaction and have received
independent third party valuations of the land on which basis the independent
members have concluded that the transaction is being conducted on an arm’s-
length basis.
CLASS ACTION COMPLAINT
21
25. The statements contained in ¶¶__-__ were materially false and/or misleading
when made because defendants failed to disclose or indicate the following: (1) that the Company
was overstating its international Basmati revenue; (2) that, as a result, the Company’s
consolidated sales revenues were also overstated; (3) that the Company was engaged in multiple
undisclosed related party transactions; and (4) that, as a result of the foregoing, Defendants’
statements about Amira’s business, operations, and prospects, were false and misleading and/or
lacked a reasonable basis.
Disclosures at the End of the Class Period
26. On February 9, 2015, Prescient Point Research Group published a research report
about Amira. Therein, the research report, in relevant part, stated:
The more we researched Amira, the more red flags we found. But our interest was
recently piqued for two reasons:
1. Amira intends to transfer $30m of $225m of newly raised of debt capital in
what amounts to a sham real estate transaction. The purchase price appears to be
multiples of both his purchase price and current market rates, amounting to an
egregious transfer of shareholder capital into his pockets.
We should mention, as discussed extensively in this report, our investigation has
revealed that the Indian rice industry is rampant with fraud. []
2. We have developed information that amounts to a smoking gun
To be clear, we believe Amira Nature Foods i[s] fabricating the financials it
files with the Securities and Exchange Commission. We hope that investors
who own ANFI equity and those considering buying debt or equity at what
appears to be a fundamentally low valuation familiarize themselves with the
risks we addressed. There are many more we do not. We also hope that the SEC
and Deloitte take necessary precautions in protecting investors.
We have sourced official Indian government Basmati export data that proves
ANFI has overstated its international Basmati revenue. We estimate that ANFI
inflated this metric by ~145% in FY’13 and ~117% in FY’14, implying that in
FY’14, ~19% of ANFI consolidated sales were fabricated. We have also collected
evidence indicating Amira is lying about its India Basmati revenue, which it tells
US investors is derived wholly from the sale of branded product. Amira claimed
CLASS ACTION COMPLAINT
22
~$224m in Indian Basmati revenue in FY’14; we estimate it actually generated
~$38m, implying that another 34% of consolidated sales are fabricated. Over 50%
of ANFI’s consolidated revenue is suspect; that number could be larger, as we are
giving the company full credit for its reported revenue from non-Basmati rice and
other commodity products.
We have identified scores of undisclosed related party entities that are listed to be
operating from within Amira’s headquarters, use Amira email addresses, and are
directed by ANFI CEO Karan Chanana or his wife; at least a couple of these
entities are in the business of distributing rice, including Basmati rice, and other
commodities.
We have also identified a company named Gautam TechAgro we have tied to
CEO Karan Chanana, and that claims to be one of Amira’s largest suppliers; a
ranking employee at Gautam also claims it is “National distributor for Amira.”
We also have new answers to old questions. We have received confirmation that
Amira has been transacting with an undisclosed related party Karam Enterprises
since IPO’ing, and that Karam was Amira’s largest customer. Karam was
purportedly Amira’s sole distributor in the EMEA, its largest market outside of
India.
We think Amira bears a striking resemblance to a fraudulent US-listed Chinese
RTO, so are confident that it will meet the same fate. []
27. On this news, shares of Amira declined $3.45 per share, nearly 26%, to close on
February 9, 2015, at $9.95 per share, on unusually heavy volume.
CLASS ACTION ALLEGATIONS
28. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a class, consisting of all those who purchased Amira’s
securities between August 26, 2013 and February 8, 2015, inclusive (the “Class Period”) and
who were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers
and directors of the Company, at all relevant times, members of their immediate families and
their legal representatives, heirs, successors or assigns and any entity in which Defendants have
or had a controlling interest.
CLASS ACTION COMPLAINT
23
29. The members of the Class are so numerous that joinder of all members is
impracticable. Throughout the Class Period, Amira’s securities were actively traded on the New
York Stock Exchange (the “NYSE”). While the exact number of Class members is unknown to
Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes
that there are hundreds or thousands of members in the proposed Class. Millions of Amira
shares were traded publicly during the Class Period on the NYSE. Record owners and other
members of the Class may be identified from records maintained by Amira or its transfer agent
and may be notified of the pendency of this action by mail, using the form of notice similar to
that customarily used in securities class actions.
30. Plaintiff’s claims are typical of the claims of the members of the Class as all
members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
federal law that is complained of herein.
31. Plaintiff will fairly and adequately protect the interests of the members of the
Class and has retained counsel competent and experienced in class and securities litigation.
32. Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among the
questions of law and fact common to the Class are:
(a) whether the federal securities laws were violated by Defendants’ acts as
alleged herein;
(b) whether statements made by Defendants to the investing public during the
Class Period omitted and/or misrepresented material facts about the business, operations, and
prospects of Amira; and
CLASS ACTION COMPLAINT
24
(c) to what extent the members of the Class have sustained damages and the
proper measure of damages.
33. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
the damages suffered by individual Class members may be relatively small, the expense and
burden of individual litigation makes it impossible for members of the Class to individually
redress the wrongs done to them. There will be no difficulty in the management of this action as
a class action.
UNDISCLOSED ADVERSE FACTS
34. The market for Amira’s securities was open, well-developed and efficient at all
relevant times. As a result of these materially false and/or misleading statements, and/or failures
to disclose, Amira’s securities traded at artificially inflated prices during the Class Period.
Plaintiff and other members of the Class purchased or otherwise acquired Amira’s securities
relying upon the integrity of the market price of the Company’s securities and market
information relating to Amira, and have been damaged thereby.
35. During the Class Period, Defendants materially misled the investing public,
thereby inflating the price of Amira’s securities, by publicly issuing false and/or misleading
statements and/or omitting to disclose material facts necessary to make Defendants’ statements,
as set forth herein, not false and/or misleading. Said statements and omissions were materially
false and/or misleading in that they failed to disclose material adverse information and/or
misrepresented the truth about Amira’s business, operations, and prospects as alleged herein.
36. At all relevant times, the material misrepresentations and omissions particularized
in this Complaint directly or proximately caused or were a substantial contributing cause of the
CLASS ACTION COMPLAINT
25
damages sustained by Plaintiff and other members of the Class. As described herein, during the
Class Period, Defendants made or caused to be made a series of materially false and/or
misleading statements about Amira’s financial well-being and prospects. These material
misstatements and/or omissions had the cause and effect of creating in the market an
unrealistically positive assessment of the Company and its financial well-being and prospects,
thus causing the Company’s securities to be overvalued and artificially inflated at all relevant
times. Defendants’ materially false and/or misleading statements during the Class Period
resulted in Plaintiff and other members of the Class purchasing the Company’s securities at
artificially inflated prices, thus causing the damages complained of herein.
LOSS CAUSATION
37. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused
the economic loss suffered by Plaintiff and the Class.
38. During the Class Period, Plaintiff and the Class purchased Amira’s securities at
artificially inflated prices and were damaged thereby. The price of the Company’s securities
significantly declined when the misrepresentations made to the market, and/or the information
alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,
causing investors’ losses.
SCIENTER ALLEGATIONS
39. As alleged herein, Defendants acted with scienter in that Defendants knew that
the public documents and statements issued or disseminated in the name of the Company were
materially false and/or misleading; knew that such statements or documents would be issued or
disseminated to the investing public; and knowingly and substantially participated or acquiesced
in the issuance or dissemination of such statements or documents as primary violations of the
CLASS ACTION COMPLAINT
26
federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their
receipt of information reflecting the true facts regarding Amira, his/her control over, and/or
receipt and/or modification of Amira’s allegedly materially misleading misstatements and/or
their associations with the Company which made them privy to confidential proprietary
information concerning Amira, participated in the fraudulent scheme alleged herein.
APPLICABILITY OF PRESUMPTION OF RELIANCE
(FRAUD-ON-THE-MARKET DOCTRINE)
40. The market for Amira’s securities was open, well-developed and efficient at all
relevant times. As a result of the materially false and/or misleading statements and/or failures to
disclose, Amira’s securities traded at artificially inflated prices during the Class Period. On
February 24, 2014, the Company’s stock closed at a Class Period high of $23.17 per share.
Plaintiff and other members of the Class purchased or otherwise acquired the Company’s
securities relying upon the integrity of the market price of Amira’s securities and market
information relating to Amira, and have been damaged thereby.
41. During the Class Period, the artificial inflation of Amira’s stock was caused by
the material misrepresentations and/or omissions particularized in this Complaint causing the
damages sustained by Plaintiff and other members of the Class. As described herein, during the
Class Period, Defendants made or caused to be made a series of materially false and/or
misleading statements about Amira’s business, prospects, and operations. These material
misstatements and/or omissions created an unrealistically positive assessment of Amira and its
business, operations, and prospects, thus causing the price of the Company’s securities to be
artificially inflated at all relevant times, and when disclosed, negatively affected the value of the
Company stock. Defendants’ materially false and/or misleading statements during the Class
CLASS ACTION COMPLAINT
27
Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities
at such artificially inflated prices, and each of them has been damaged as a result.
42. At all relevant times, the market for Amira’s securities was an efficient market for
the following reasons, among others:
(a) Amira stock met the requirements for listing, and was listed and actively
traded on the NYSE, a highly efficient and automated market;
(b) As a regulated issuer, Amira filed periodic public reports with the SEC
and/or the NYSE;
(c) Amira regularly communicated with public investors via established
market communication mechanisms, including through regular dissemination of press releases
on the national circuits of major newswire services and through other wide-ranging public
disclosures, such as communications with the financial press and other similar reporting services;
and/or
(d) Amira was followed by securities analysts employed by brokerage firms
who wrote reports about the Company, and these reports were distributed to the sales force and
certain customers of their respective brokerage firms. Each of these reports was publicly
available and entered the public marketplace.
43. As a result of the foregoing, the market for Amira’s securities promptly digested
current information regarding Amira from all publicly available sources and reflected such
information in Amira’s stock price. Under these circumstances, all purchasers of Amira’s
securities during the Class Period suffered similar injury through their purchase of Amira’s
securities at artificially inflated prices and a presumption of reliance applies.
NO SAFE HARBOR
CLASS ACTION COMPLAINT
28
44. The statutory safe harbor provided for forward-looking statements under certain
circumstances does not apply to any of the allegedly false statements pleaded in this Complaint.
The statements alleged to be false and misleading herein all relate to then-existing facts and
conditions. In addition, to the extent certain of the statements alleged to be false may be
characterized as forward looking, they were not identified as “forward-looking statements” when
made and there were no meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those in the purportedly forward-looking
statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to
any forward-looking statements pleaded herein, Defendants are liable for those false forward-
looking statements because at the time each of those forward-looking statements was made, the
speaker had actual knowledge that the forward-looking statement was materially false or
misleading, and/or the forward-looking statement was authorized or approved by an executive
officer of Amira who knew that the statement was false when made.
FIRST CLAIM
Violation of Section 10(b) of
The Exchange Act and Rule 10b-5
Promulgated Thereunder Against All Defendants
45. Plaintiff repeats and realleges each and every allegation contained above as if
fully set forth herein.
46. During the Class Period, Defendants carried out a plan, scheme and course of
conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing
public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and
other members of the Class to purchase Amira’s securities at artificially inflated prices. In
furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them,
took the actions set forth herein.
CLASS ACTION COMPLAINT
29
47. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made
untrue statements of material fact and/or omitted to state material facts necessary to make the
statements not misleading; and (iii) engaged in acts, practices, and a course of business which
operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to
maintain artificially high market prices for Amira’s securities in violation of Section 10(b) of the
Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the
wrongful and illegal conduct charged herein or as controlling persons as alleged below.
48. Defendants, individually and in concert, directly and indirectly, by the use, means
or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse material information about Amira’s financial
well-being and prospects, as specified herein.
49. These defendants employed devices, schemes and artifices to defraud, while in
possession of material adverse non-public information and engaged in acts, practices, and a
course of conduct as alleged herein in an effort to assure investors of Amira’s value and
performance and continued substantial growth, which included the making of, or the
participation in the making of, untrue statements of material facts and/or omitting to state
material facts necessary in order to make the statements made about Amira and its business
operations and future prospects in light of the circumstances under which they were made, not
misleading, as set forth more particularly herein, and engaged in transactions, practices and a
course of business which operated as a fraud and deceit upon the purchasers of the Company’s
securities during the Class Period.
50. Each of the Individual Defendants’ primary liability, and controlling person
liability, arises from the following facts: (i) the Individual Defendants were high-level executives
CLASS ACTION COMPLAINT
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and/or directors at the Company during the Class Period and members of the Company’s
management team or had control thereof; (ii) each of these defendants, by virtue of their
responsibilities and activities as a senior officer and/or director of the Company, was privy to and
participated in the creation, development and reporting of the Company’s internal budgets, plans,
projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and
familiarity with the other defendants and was advised of, and had access to, other members of the
Company’s management team, internal reports and other data and information about the
Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants
was aware of the Company’s dissemination of information to the investing public which they
knew and/or recklessly disregarded was materially false and misleading.
51. The defendants had actual knowledge of the misrepresentations and/or omissions
of material facts set forth herein, or acted with reckless disregard for the truth in that they failed
to ascertain and to disclose such facts, even though such facts were available to them. Such
defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and
for the purpose and effect of concealing Amira’s financial well-being and prospects from the
investing public and supporting the artificially inflated price of its securities. As demonstrated
by Defendants’ overstatements and/or misstatements of the Company’s business, operations,
financial well-being, and prospects throughout the Class Period, Defendants, if they did not have
actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to
obtain such knowledge by deliberately refraining from taking those steps necessary to discover
whether those statements were false or misleading.
52. As a result of the dissemination of the materially false and/or misleading
information and/or failure to disclose material facts, as set forth above, the market price of
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31
Amira’s securities was artificially inflated during the Class Period. In ignorance of the fact that
market prices of the Company’s securities were artificially inflated, and relying directly or
indirectly on the false and misleading statements made by Defendants, or upon the integrity of
the market in which the securities trades, and/or in the absence of material adverse information
that was known to or recklessly disregarded by Defendants, but not disclosed in public
statements by Defendants during the Class Period, Plaintiff and the other members of the Class
acquired Amira’s securities during the Class Period at artificially high prices and were damaged
thereby.
53. At the time of said misrepresentations and/or omissions, Plaintiff and other
members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff
and the other members of the Class and the marketplace known the truth regarding the problems
that Amira was experiencing, which were not disclosed by Defendants, Plaintiff and other
members of the Class would not have purchased or otherwise acquired their Amira securities, or,
if they had acquired such securities during the Class Period, they would not have done so at the
artificially inflated prices which they paid.
54. By virtue of the foregoing, Defendants have violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
55. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and
the other members of the Class suffered damages in connection with their respective purchases
and sales of the Company’s securities during the Class Period.
SECOND CLAIM
Violation of Section 20(a) of
The Exchange Act Against the Individual Defendants
56. Plaintiff repeats and realleges each and every allegation contained above as if
fully set forth herein.
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57. The Individual Defendants acted as controlling persons of Amira within the
meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level
positions, and their ownership and contractual rights, participation in and/or awareness of the
Company’s operations and/or intimate knowledge of the false financial statements filed by the
Company with the SEC and disseminated to the investing public, the Individual Defendants had
the power to influence and control and did influence and control, directly or indirectly, the
decision-making of the Company, including the content and dissemination of the various
statements which Plaintiff contends are false and misleading. The Individual Defendants were
provided with or had unlimited access to copies of the Company’s reports, press releases, public
filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after
these statements were issued and had the ability to prevent the issuance of the statements or
cause the statements to be corrected.
58. In particular, each of these Defendants had direct and supervisory involvement in
the day-to-day operations of the Company and, therefore, is presumed to have had the power to
control or influence the particular transactions giving rise to the securities violations as alleged
herein, and exercised the same.
59. As set forth above, Amira and the Individual Defendants each violated Section
10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of
their positions as controlling persons, the Individual Defendants are liable pursuant to Section
20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct,
Plaintiff and other members of the Class suffered damages in connection with their purchases of
the Company’s securities during the Class Period.
PRAYER FOR RELIEF
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WHEREFORE, Plaintiff prays for relief and judgment, as follows:
(a) Determining that this action is a proper class action under Rule 23 of the Federal
Rules of Civil Procedure;
(b) Awarding compensatory damages in favor of Plaintiff and the other Class
members against all defendants, jointly and severally, for all damages sustained as a result of
Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;
(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in
this action, including counsel fees and expert fees; and
(d) Such other and further relief as the Court may deem just and proper.
JURY TRIAL DEMANDED
Plaintiff hereby demands a trial by jury.
DATED:
By:___DRAFT______________________
GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy
Robert V. Prongay
Casey E. Sadler
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
LAW OFFICES OF HOWARD G. SMITH Howard G. Smith
3070 Bristol Pike, Suite 112
Bensalem, PA 19020
Telephone: (215) 638-4847
Facsimile: (215) 638-4867
Attorneys for Plaintiff