|[February 12, 2014]
Schiff Hardin LLP and Oppenheimer Wolff & Donnelly LLP Announce Notice of Filing Securities Class Action
MINNEAPOLIS --(Business Wire)--
Schiff Hardin LLP and Oppenheimer Wolff & Donnelly LLP filed the class
action lawsuit in the United States District Court for the District of
Minnesota, on behalf of William Dean, and all similarly-situated persons
and entities who purchased Telecommunications Revenue Bonds Series 2008
(the "Bonds") issued by the Defendant City of Monticello (the "City")
between June 19, 2008 and May 31, 2012, inclusive (the "Class Period")
(Civ. Act. No. 14-cv-00376, filed on Feb. 12, 2014). The action alleges
that the City committed violations of the Securities Exchange Act of
1934 and the Minnesota Securities Act of 2002.
The City is a political subdivision of the State of Minnesota. The Bonds
were issued by the City to provide funds to finance the development,
acquisition, construction and installation of a "fiber to the premises"
broadband communications network (the "FTTP Project"), which provides
cable television services, internet access and telephone services. The
FTTP Project is owned, developed and constructed by the City.
The complaint alleges that, during the Class Period, the City made
fraudulent material misrepresentations and omissions regarding the
economic feasibility of the FTTP Project. The sole source of revenue to
pay debt service on the Bonds is net operating revenues from the FTTP
Project. The net revenues generated by the FTTP Project for the first
several years of operations were highly dependent upon the time frame in
which the network was completed, as the nderlying technology and direct
competition in the retail telecommunications market is constantly
evolving. Among other things, the complaint alleges that the City failed
to disclose the following material facts: (i) on May 21, 2008, less than
one month before the issuance of the Bonds, a Summons and Complaint (the
"Litigation") was served upon the City by Bridgewater Telephone Company,
Inc.; (ii) the City was aware that, as a result of this ongoing
Litigation, construction for the FTTP Project would be significantly
delayed; (iii) the delay in construction for the FTTP Project would
negatively impact projected net revenues, the sole source of cash flow
to pay debt service on the Bonds; (iv) the projected net revenues set
forth in the offering documents were no longer accurate; (v) bondholders
could not rely on the forecasted financial statement set forth in the
offering documents to determine when the FTTP Project would begin to
generate net revenues.
Due to delays in construction as a result of the Litigation, as well as
competition in the market, the FTTP Project has struggled to gain
subscribers. In fact, the City has lost money providing the services
contemplated by the FTTP Project. Furthermore, until July of 2011, debt
service on the Bonds was paid solely from Bond proceeds and not from net
revenues of the FTTP Project. The City also used a loan from another
department to pay debt service on the Bonds from June 2011 until June
2012. On May 31, 2012, the City publicly announced that it would no
longer pay debt service due on the Bonds.
Plaintiff seeks to recover damages on behalf of all purchasers of the
Bonds during the Class Period (the "Class"). The plaintiff is
represented by Schiff Hardin LLP and Oppenheimer Wolff & Donnelly LLP,
which have expertise in prosecuting investor class actions and extensive
experience in actions involving financial fraud.
A proposed settlement has been reached with the City in relation to this
matter. The proposed Settlement agreement provides for a total recovery
of $7,750,000. The Settlement fund includes two parts: (1) a cash
payment of $5,750,000 from the City, and (2) a distribution of
$2,000,000 in trust funds currently held under an indenture. The
Settlement will resolve all claims related to the offering and sale of
the Bonds issued by the City. If approved, the Settlement will conclude
the class action.
If you purchased or acquired the Bonds during the Class Period, and you
wish to serve as lead plaintiff, you may move the Court no later than 60
days from today (no later than April 13, 2014). Any member of the
putative class may move the Court to serve as lead plaintiff through
counsel of their choice, or may choose to do nothing and remain a member
of the proposed class.
If you desire to be represented by your own lawyer, you may hire one at
your own expense and you may enter an appearance with the Court.
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