PHILADELPHIA, Sept. 2, 2005 (PRIMEZONE) -- Law Offices Bernard M. Gross, P.C. (http://www.bernardmgross.com) announces that a class action lawsuit was commenced in the United States District Court for the District of New Jersey on behalf of purchasers of Arbinet-thexchange ("Arbinet" or the "Company") (Nasdaq:ARBX) common stock in connection with or traceable to its December 16, 2004 Initial Public Offering ("IPO") and who have been damaged thereby.
The action is pending against defendants Arbinet-thexchange, Inc., Curt Hockemeier -- Director of the Company, John Roberts -- Chief Financial Officer, Merrill Lynch & Co. -- underwriter of the IPO, Lehman Brothers -- underwriter of the IPO, William Blair & Co. -- underwriter of the IPO, Advanced Equities, Inc. -- underwriter of the IPO. A copy of the Complaint is available from the Court or can be viewed on the Law Offices Bernard M. Gross, P.C. website at www.bernardmgross.com.
The Complaint charges defendants with violations of the Securities Act of 1933. Arbinet is the leading electronic market for trading, routing and settling communications capacity. Arbinet provides an efficient alternative to direct individual negotiations and purchasers of access to the networks of other communication service providers to send voice calls and internet capacity outside their network.
In December, 2004, Arbinet completed an IPO of 6.5 million shares of common stock pursuant to a Prospectus/Registration Statement. The IPO, was comprised of 4.23 million shares of common stock sold by Arbinet and 2.3 million shares of common stock to be sold by the selling shareholders. The IPO was priced at $17.50 per share for total proceeds of $68.9 million to Arbinet and 37.4 million to the selling shareholders after underwriting discounts and commissions. The Complaint alleges that the Prospectus/Registration Statement was materially false and misleading and failed to disclose the following: (a) that increases in wireless calls would decrease Arbinet's revenues and profits because wireless calls, on the average, are of shorter duration than wired calls and, therefore, generate less revenue and profits for Arbinet because Arbinet's fees are based primarily on numbers of minutes used; (b) that because certain geographic markets are characterized by shorter-duration calls and, therefore, generate lower fees, shifts in the geographic market usage mix will decrease revenues and profits; (c) that the growth in the number of calls completed is not the true indicator of Arbinet's revenues and profits because it the duration of the call completed, that is the number of minutes per call rather than the number of calls completed, that determines the fees Arbinet receives; (d) that the exchange lacked a sufficient liquidity "floor" to insure that there would be a sufficient number of buyers and that, as a result, Arbinet's revenues would be reduced by substantial price incentives Arbinet would offer in order to generate fee revenue; (e) that Arbinet's revenues would be materially adversely impacted if one or two of its larger customers experienced credit worthiness problems and reduced their trading, despite Arbinet's intensive credit risk management programs; (f) that Arbinet's business model for providing wholesale capacity, particularly in providing international voice capacity, is not significantly different from its competitors, including iBasic, and that as result, Arbinet will not be able to keep pace with the growth in the in the international wholesale market; and (g) that Arbinet did not have the lowest cost termination rates to a significant number of calling destinations in the international wholesale market and, therefore, would lose traffic to lower cost competitors and suffer reduced growth rates.
Then, on May 5, 2005, the price of Arbinet stock dropped almost 25% when the Company announced that its first quarter results for 2005 would be greatly reduced. Subsequently on June 22, 2005, the price of Arbinet stock dropped another 35% when the Company disclosed additional information that would cause its second quarter 2005 revenues and profits, again, to be greatly reduced.
Plaintiff seeks to recover damages on behalf of Class members and is represented by Law Offices Bernard M. Gross, P.C. which has significant experience and expertise in prosecuting class actions.
If you purchased common stock of Arbinet-thexchange in connection with or traceable to its December 16, 2004 Initial Public Offering ("IPO"), you may no later than, November 1, 2005 move the Court to serve as lead plaintiff of the Class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this Notice or rights or interests with respect to these matters,
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca