Washington Prime Group Inc (NYSE: WPG) stock trades at $4.84 (down 47.28%) on June 11, 2021. If the stock can move above $6.73, it can target $10. But, many lawsuits are pending against the company for misleading the shareholders through wrong statements of its financial health. Therefore, investors need to exercise caution in increasing exposure to Washington Prime stock.
However, attorneys of shareholders rights firms warned investors that a class action lawsuit is filed against the company and some company officers for misleading investors.
The lawsuit is filed on behalf of the shareholders, who purchased shares of Washington Prime between November 5, 2020, and March 4, 2021. It seeks a remedy under the SEA (Securities Exchange Act) 1934.
The self-administered and self-managed REIT (real estate investment trust) – WPG, which owns properties, carries out its business operations through Washington Prime. WPG holds a stake of 84.7% in Washington Prime.
Washington Prime did not reveal material adverse facts
Washington Prime did not disclose adverse material facts about its operations, business, and prospects.
According to the lawsuit, the company did not provide details about its deteriorating financial condition. Washington Prime may not service its capital structure obligations. Therefore, its reported statements about the operations, business, and prospects lack a reasonable basis or mislead the shareholders.
On February 16, 2021, WPG said Washington Prime, its operating partner, informed it to withhold $23.2 million towards Senior notes interest payment due on February 15, 2021. The outstanding senior notes of Washington Prime are due in 2024.
Washington Prime has a grace period of 30 days to pay interest. If it fails to make the interest payment within the grace period, it will be treated as a willful default.
If the company fails to make the payment, the senior noteholders can resort to recovery measures. Washington Prime stock is declined by 38% and closed at $7.49 on February 16, 2021, and hit a low of $1.82 on March 8, 2021.