GrafTech International Ltd. (NYSE: EAF) Securities Fraud Class Action

GrafTech investors may receive additional information about the case by clicking the link "Submit Your Information" above.  If you are a member of the class described below, you may no later than March 25, 2024 move the Court to serve as lead plaintiff of the class, if you so choose.

A class action lawsuit has been filed on behalf of those who purchased or acquired GrafTech International Ltd. (“GrafTech”) (NYSE: EAF) common stock between February 8, 2019 and August 3, 2023, both dates inclusive (the “Class Period”). 

Case Background:
Several years before the start of the Class Period, defendant Brookfield Asset Management Ltd. (including its affiliate defendants, “Brookfield”) acquired GrafTech in an all-cash transaction.  After the transaction closed in August 2015, GrafTech became a wholly owned affiliate of Brookfield.  Over the next few years, the company went through a transformation which resulted in 2 significant changes.  First, GrafTech shifted all of its manufacturing operations to three of its highest-capacity and lowest-cost facilities located in: (1) Monterrey, Mexico; (2) Pamplona, Spain; and (3) Calais, France. Following this shift, GrafTech manufactured all of its pin stock inventory – a critical component in GrafTech’s manufacturing process - at its Monterrey facility. Second, the company implemented a new commercial strategy to sell a majority of its graphite electrode output through three-to-five year “take or pay” contracts, which were long-term contracts and contained fixed annual prices and volumes for the contracted term. These agreements accounted for the majority of GrafTech’s total net sales and represented a more profitable source of revenues. 

Brookfield conducted GrafTech’s IPO on April 19, 2018.  In the IPO offering documents, the company lauded its “transformation” and claimed that it had emerged from its restructuring with the “most competitive portfolio of low-cost graphite electrode manufacturing facilities in the industry.” The offering documents further represented that GrafTech’s facilities were “modern, strategically located and well-maintained,” which they claimed would provide the company with efficient growth opportunities following the offering. Key to this purportedly sustainable growth were claims in IPO offering materials regarding the “more environmentally friendly nature of EAF steelmaking” employed by GrafTech’s customers. Defendants continued to represent throughout the Class Period that GrafTech was committed to protecting the environment and acting “proactively” to advance sustainability initiatives.

On September 16, 2022, GrafTech revealed that its critical manufacturing facility in Monterrey, Mexico had been shut down by regulators following inspections by the State Attorney’s office for the Secretary of Environment and the Ministry of the Environment. The Monterrey facility was responsible for manufacturing 30% of GrafTech’s overall graphite electrode output and 100% of its pin stock. Following this news, GrafTech's stock price fell $0.45, or 8.5%, to close at $4.85 on September 19, 2022. 

Then, on August 4, 2023, GrafTech issued a press release reporting the company’s financial and operational results for the quarter ended June 30, 2023. In the results, GrafTech reported that sales declined 49% compared to the second quarter of 2022 as the company continued to “recover” from the effects of the Monterrey facility shutdown. As a result of the substantial decline in net sales, GrafTech reported a net loss of $8 million compared to $115 million in net income reported in the second quarter of 2022. On the investor conference call discussing the results, GrafTech attributed the Monterrey suspension as the “key driver” of the underperformance and disclosed that GrafTech’s ability to secure customer contracts would continue to be indirectly impacted in the second half of fiscal 2023.

Following this news, GrafTech’s stock price fell $1.18 per share, or 22.56%, to close at $4.05 per share on August 4, 2023.

The complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements and/or failed to disclose that: (1) GrafTech’s manufacturing operations in Monterrey had for decades chronically contaminated neighboring communities with harmful carcinogenic gasses and particulate matter; (2) GrafTech had signed agreements with local authorities committing itself to improving the environmental performance of its Monterrey facility, but repeatedly failed to honor these commitments; (3) GrafTech had been repeatedly warned over an approximately 30-year period regarding its wanton disregard for the environment and health and well-being of people near its operations in Monterrey; (4) GrafTech’s operations in Monterrey were not in compliance with applicable environmental laws and regulations; (5) GrafTech had failed to adequately remediate the environmental problems caused by the Monterrey facility following the 2019 administrative proceeding conducted by the Department of Sustainable Development of the State of Nuevo León; (6) the government of Apodaca had sought intervention from the State of Nuevo León authorities to curtail and prevent the adverse environmental impacts and noncompliance with environmental laws and regulations caused by the Monterrey facility; (7) GrafTech’s purported cost leadership was achieved in substantial part by failing to implement appropriate and effective environmental safeguards at its manufacturing facility in Monterrey; (8) GrafTech’s capital expenditures and/or related operational projects were woefully insufficient to adequately address the harm that GrafTech’s operations in Monterrey had inflicted on the environment and people within the neighboring communities; (9) in light of the foregoing, GrafTech was acutely exposed to undisclosed material risks that GrafTech’s manufacturing operations in Monterrey would be severely disrupted by government action or enforcement; and (10) as a result, GrafTech was acutely exposed to undisclosed material risks that its supplies of pin stock and graphite electrodes would be withdrawn and/or materially diminished, thereby materially harming GrafTech’s business, operations, reputation, and financial results. 

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. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case.  Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP:  Jonathan Naji, Esq. (484) 270-1453 or via e-mail at info@ktmc.com.  If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.