LAVAL, Que. - Neptune Technologies & Bioressources Inc. says it will fight a U.S. class-action lawsuit from shareholders over a powerful explosion and fire at its industrial plant in Sherbrooke, Que., that killed three and injured 18 last month.
The Quebec-based company said Thursday that the lawsuit is "completely without merit" and that it has "substantial and meritorious legal and factual defences, which Neptune intends to pursue vigorously."
The law firm representing shareholders claims, among other things, that Neptune had installed larger acetone storage tanks at the Sherbrooke production plant that facilitated "dangerously high levels" of of the chemical at the site.
Neptune (TSX:NTB) said Thursday the amount of acetone levels stored on-site or used in the production of its krill oil products never exceeded levels permitted by the province. It also obtained the required construction permits for the plant expansion and was in the process of obtaining the required environmental permits for the expansion.
It repeated that a Quebec Ministry of Environment notice received on Nov. 16 alleging environmental non-compliance related to equipment acquisitions and the plant expansion, not acetone levels.
The incident occurred in Quebec's Eastern Townships at a facility which produces health products derived from marine life.
The lawsuit filed Wednesday in the United States District Court for the Southern District of New York alleges violations of the Securities Exchange Act.
The complaint was filed on behalf of the purchasers of Neptune stock between Dec. 12, 2011 and Nov. 18, 2012. The period included a public offering of Neptune shares on Sept. 25, 2012, at $4.10.
The stock is now worth about half that, trading at about $2.05 on the Toronto Stock Exchange.
The firm representing shareholders, Robbins Geller Rudman & Dowd LLP, that througout the relevant period Neptune "lauded the future benefits" of an expansion at the production plant and failed to disclose several adverse facts.
Neptune says it continues to work on its plan to resume its neutraceutical operations and certain levels of sales of its products to customers in the short term, while reconstructing a plant using the expansion facility and equipment that doesn't appear to have suffered significant damage in the explosion.
The company has said it expects insurance coverage would likely be enough to fund most of the costs for construction of a new plant that could be operational in six to nine months.