Injunction Denied for 'Hemorrhaging' Company

     BROOKLYN (CN) - An international shipping company whose share price bottomed out at 39 cents last month cannot block new acquisitions from an investor, a federal judge ruled
     NewLead Holdings Ltd., a Greek shipping company and owner of dry bulk carriers and mining assets, agreed earlier this year that Ironridge Global Ltd. would invest in its company. After reaching share-subscription agreement in March, Ironridge bought 500 shares in NewLead for $2.5 million in cash and an additional 2,250 shares for nine loans worth $2.5 million each.
     The underlying agreement prohibited Ironridge from short-selling its stock in NewLead.
     Claiming that Ironridge had violated that provision, NewLead filed suit on June 3, accusing Ironridge of driving down its share price from $146.50 in March to just 39 cents in May. It also argued that it would not survive if Ironridge continued to obtain new shares and drive down the share price.
     Though NewLead had obtained a temporary restraining order upon filing suit, U.S. District Judge William dissolved that order Wednesday and denied the plaintiff a preliminary injunction in aid of an international arbitration proceeding.
     He noted that NewLead was selling at $2,085 a share in October 2013, and that, between January and April, NewLead's share prices dropped 97.8 percent from $225 to $17.
     "Ironridge is responsible for only a small portion of NewLead's share dilution," the 15-page ruling states.
     "NewLead will continue to hemorrhage common shares and dilute their value regardless of whether Ironridge is enjoined," Pauley added.
     NewLead announced Thursday that it would seek damages from Ironridge, which it accuses it of manipulating stock prices.
     In denying the company an injunction, Pauley said his court lacked jurisdiction.
     "Because of the way embedded dividend liabilities are measured, if they are paid in shares, as they were here, Ironridge is entitled to more and more shares if NewLead's stock price drops," Pauley wrote. "Almost every day since April 14, Ironridge has obtained and sold large numbers of NewLead common shares."
     As of June 6, Ironridge has "received over eight million common shares," the ruling continues.
     "Even if NewLead is correct that the cash is not yet due and Ironridge would be acting wrongfully, NewLead could tender the cash now and assert a claim for damages in the arbitration, making this a dispute over money and therefore inappropriate for equitable relief," the ruling also states.