NEW YORK, Oct. 23, 2002 (PRIMEZONE) -- The following statement was issued today by the law firm of Wechsler Harwood LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Northern District of Texas, Dallas Division on behalf of all purchasers of the common stock of TXU Corporation (NYSE:TXU) from April 25, 2002 through October 11, 2002, inclusive (the "Class Period").
The complaint charges TXU and certain of its officers and directors with violations of the federal securities laws arising out of defendants' issuance of false and misleading statements about the Company's business, operating performance and prospects. The complaint alleges that during the Class Period, defendants misrepresented that the Company could succeed in the competition created by deregulation. Defendants then misrepresented that TXU's European operations were improving, that it would succeed in competition in the U.K. market and that it was on track to report EPS of $4.35+ and $4.60+ in 2002 and 2003, respectively. As a result of these allegedly false statements, TXU's stock traded at artificially inflated levels- as high as $56 per share.
Due to this inflation, defendants were able to complete a secondary offering of 11.8 million shares of common stock, priced at $51.15 per share and 8.8 million units of FELINE PRIDES (equity linked debt securities), raising nearly a billion dollars in much needed financing. Subsequent to the offering, defendants needed to maintain a high stock price to avoid triggering additional debt and the conversion of preferred stock into common stock pursuant to a partnership agreement.
On October 4, 2002, TXU issued an earnings warning, indicating that due to customer attrition and ongoing problems in Europe, the Company would report 2002 EPS of only $3.25. On this news, the Company's stock price declined to $27 per share, from more than $40 per share the prior week. However, the stock continued to be inflated as defendants concealed the extreme liquidity problems from which the Company was suffering. Defendants even assured the market that the Company was strong financially and that the dividend was "sound and secure." Then, on October 14, 2002, before the market opened, TXU stunned the market with news that it was cutting its dividend 80%, to $0.125 per share, and would no longer support its European operations. The Company's stock price immediately collapsed on this news to as low as $10.10 per share before closing at $12.94, a one day drop of 31% on volume of 39 million shares.
If you are a member of the class described above, you may, not later than December 13, 2002, 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 are a member of the Class described above, and if you meet certain other legal requirements, you may, no later than December 13, 2002, move the Court to serve as a lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. Section 78u-4).
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whhf.com) has more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400 Craig Lowther, Wechsler Harwood Shareholder Relations Department: clowther@whhf.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca