Britannia Bulk Holdings Inc. may have misrepresented its financial condition by entering into unneeded hedging activities which resulted in it losing all its capital.

This is a securities class action lawsuit against Britannia Bulk Holdings Inc. and certain officers and directors.

On June 17, 2008, Britannia Bulk accomplished its IPO of 8.3 million shares at $15.00 per share for net proceeds of $116.2 million, pursuant to the Registration Statement.

In its first day of trading, Britannia Bulk stock closed at $13.85 per share. Then, on October 28, 2008, Britannia Bulk issued a press release announcing that Britannia Bulk expected a significant net loss for the third quarter of 2008 compared to the net income achieved during the second quarter of 2008. The loss was due to problems with hedges Britannia Bulk had entered into earlier in the year. In addition, Britannia Bulk announced it would not pay a dividend on its common shares for the quarter ended September 30, 2008, or for the foreseeable future.

Following this disclosure, Britannia Bulk's stock collapsed to $0.16 per share. The following day, Britannia Bulk disclosed that it had been notified by its lenders that they were accelerating all of its subsidiary's obligations under a $170 million lending facility. This would ultimately result in the subsidiary being placed into administration under U.K. insolvency laws.

According to the class action complaint, the Registration Statement failed to disclose the problems in Britannia Bulk's activities in the forward freight agreements (FFAs) market. Specifically, the Registration Statement concealed that Britannia Bulk failed to institute and enforce controls that would prevent Britannia Bulk personnel from buying FFAs not purchased to hedge identifiable ship or cargo positions. FFAs were represented to only be used as a hedge for work Britannia Bulk's ships engaged in. However, in fact, FFAs were used outside of these guidelines, exposing Britannia Bulk to significant risks. Moreover, Britannia Bulk had not entered into appropriate fixed price contracts given the dramatic fluctuation in crude oil and bunker fuels.