ICG hit with class action lawsuit

A SHAREHOLDER group has accused International Coal Group of inflating coal production numbers and understating safety issues, causing the company’s shares to fall.
ICG hit with class action lawsuit ICG hit with class action lawsuit ICG hit with class action lawsuit ICG hit with class action lawsuit ICG hit with class action lawsuit

International Coal Group's Sago mine in West Virginia.

Donna Schmidt

On Friday the legal representative for the shareholder group, California firm Finkelstein & Krinsk, said the company and “certain of its directors and officers” made statements to shareholders that caused the price of ICG shares to drop.

The shareholders are alleging ICG overstated coal production totals and downplayed the safety issues that contributed to the Sago mine disaster of January 2006, when a dozen workers lost their lives.

Finkelstein and Krinsk did not detail the statements further or indicate when the comments were made, but did request those who bought shares between April 25, 2005 and June 9, 2006 to contact them.

ICG did not issue a public response Friday.

In April, ICG officials said the producer’s quarterly numbers were up despite the shaky market.

While the company’s coal production did drop slightly, from 4.9 million tons in the first quarter of 2008 to 4.7Mt in the corresponding period this year, it reported a first quarter net income of $US3.7 million, a sharp increase from the $11.9 million net loss made in the same period last year.

The company’s revenues were also up 21% to $305 million, versus 2008’s first quarter total of $251.9 million, despite the lower sales volume.

In the same financials, it reported a significant margin per ton jump of 144% in its first fiscal quarter from $3.67 to $8.94 due to higher realized prices and improved cost performance.