ٍٍRigzone – Occidental Petroleum Corp. has been hit with litigation by investors who say they lost billions because the debt-laden firm was not transparent about its ability to navigate oil market volatility after shelling out a whopping $35.7 billion to buy Anadarko Petroleum last year.
According to reports from Reuters, the securities class action was filed May 26 in a Manhattan, New York state court on behalf of former Anadarko shareholders who traded their stock for Oxy shares, and investors who acquired $24.5 billion of the Oxy bonds that were part of the funding for the purchase.
In the complaint, investors said Oxy should have included information in its stock and bond registration statements about how “quadrupling its debt load to $40 billion would leave it ‘precariously exposed’ to falling oil prices, and undermine its ability to boost shale oil production and its common stock dividend,” according to the Reuters report.
The investors also claimed that when the company issued $10 billion of preferred stock to Warren Buffett’s Berkshire Hathaway it only exacerbated the debt problem.
At the end of the first quarter, a mere two weeks after revealing plans to cut its 2020 capital expenditures by approximately one-third and reduce its quarterly dividend by 86 percent, the company reported an additional round of belt-tightening. Around the same time, Oxy made a deal with activist investor Carl C. Icahn to add three Icahn-designated directors to the company’s board.
As this writing, shares of OXY were trading at $13.96, down 3% from the previous close and down 74% from its 52-week high of $54.05.