NEW
YORK, May 19, 2023 /PRNewswire/
-- Jakubowitz Law announces that a securities fraud class
action lawsuit has commenced on behalf of shareholders of Vertex
Energy, Inc. (NASDAQ: VTNR).
To receive updates on the lawsuit, fill out the
form:
https://claimyourloss.com/securities/vertex-energy-inc-loss-submission-form/?id=39583&from=4
The lawsuit seeks to recover losses for shareholders who
purchased Vertex between April 1,
2022 and August 8, 2022.
Shareholders interested in acting as a lead plaintiff
representing the class of wronged shareholders have until
June 12, 2023 to petition the
court. Your ability to share in any recovery doesn't require that
you serve as a lead plaintiff.
According to a filed complaint, Vertex Energy, Inc. issued
materially false and/or misleading statements and/or failed to
disclose that: (a) prior to the acquisition of the oil refinery in
Mobile, Alabama, defendants had
entered into inventory and crack spread hedging derivatives that
significantly capped the profit margins on 50% of the Mobile refinery's expected output over the
period April 1, 2022 to September 30, 2022, affecting over 6.5 million
barrels of refined fuel output. These hedges severely limited
Vertex's ability to capitalize on the record-high crack spreads
that existed at the time of the acquisition and resulted in over
$90 million in losses in the second
quarter of fiscal year 2022; (b) prior to the acquisition of the
Mobile refinery, defendants had
entered into an inventory intermediation agreement with the
investment bank Macquarie Group, whereby Macquarie purchased (from
third parties), owned, and sold (to Vertex) all crude oil inventory
to be used at the Mobile refinery
and also purchased (from Vertex), owned, and sold (to third
parties) all refined fuel inventory produced at the Mobile refinery. The strict terms of the
arrangement, including requiring Vertex to purchase hedges to
protect Macquarie's position in holding the crude and refined
inventory, combined with the fact that the oil market was in a
state of backwardation in early 2022, resulted in Vertex incurring
significant fees and inventory losses. The losses, which began as
of the April 1, 2022 acquisition
date, totaled $23 million during the
second quarter of fiscal year 2022; (c) prior to the acquisition of
the Mobile refinery, defendants had entered into an inventory
purchase agreement with Shell Oil as part of the Mobile acquisition
agreement. Vertex had anticipated purchasing approximately $100
million of crude oil and refined fuel inventory. Immediately prior
to the closing of the acquisition, Vertex learned that pursuant to
the terms of the purchase agreement, it would be required to
purchase substantially more inventory from Shell Oil, totaling $164
million. Due to the state of backwardation in the oil market,
Vertex was forced to pay Shell Oil above-market prices for the
additional crude oil inventory. The additional Shell Oil inventory
purchase triggered $13.3 million in inventory losses at or around
the time of the acquisition; (d) immediately following the
acquisition of the Mobile refinery, Vertex experienced production
issues that caused significant shortfalls in refined fuel volumes.
The production issues resulted in $8 million of lost profits during
the second quarter of fiscal year 2022; (e) following the
acquisition of the Mobile refinery, defendants overstated the
purported profit margins that could be achieved at the refinery.
Defendants represented that the "3-2-1 crack spread" was the
appropriate benchmark for the Mobile refinery; however it was later
revealed that the "2-1-1 crack spread," which resulted in lower
profits per barrel of production, was the more accurate profit
benchmark for the Mobile refinery; and (f) as a result of the above
misrepresentations and concealed facts, the Mobile refinery did not
"generate[] strong EBITDA]" "[d]uring the first 30 days of
operations," and the Mobile refinery transition was not
"seamless."
Jakubowitz Law is vigorous in pursuit of justice for
shareholders who have been the victim of securities fraud. Attorney
advertising. Prior results do not guarantee similar outcomes.
CONTACT:
JAKUBOWITZ LAW
1140 Avenue of the Americas
9th Floor
New York, New York 10036
T: (628) 895-0423
F: (212) 537-5887
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SOURCE Jakubowitz Law