Manchester Securities calls Omni Energy short-swing trading lawsuit "frivolous"

By Sheri Kasprzak

Atlanta, Jan. 31 - Manchester Securities Corp. said Monday a lawsuit filed against it and other noteholders of Omni Energy Services Corp. is "frivolous."

On Jan. 25, Omni said it filed a lawsuit in U.S. District Court for the Western District of Louisiana against the investors of its 6.5% subordinated convertible debentures. The suit alleges the noteholders engaged in a scheme to deliberately cause a decline in Omni's trading price by increasing the number of shares they were entitled to receive upon the conversion of debentures into common shares.

Manchester's management released a statement Monday claiming the lawsuit is "totally frivolous, without merit, and would be defended vigorously," adding that the suit is a "weak attempt to continue to hide the critical issues facing Omni."

The lawsuit, according to a letter to Omni's board of directors, is "another in a growing line of disappointing actions taken by Omni's management under your supervision demonstrating a complete and utter disregard for your stakeholders and fiduciary duties."

The Manchester statement urges Omni to drop the suit and meet with its significant investors for a full disclosure of its debt obligations. Manchester claims that Omni has not made full disclosures of material facts regarding defaults under debt obligations for several months.

The statement from Manchester also alleges that even though Omni's chairman and chief executive officer James Eckert has said its fundamentals are strong, the company is delinquent on more than $4 million of interest and principal payments. That default, Manchester says, has triggered delinquency on Omni's other debt.

Eckert did not return calls Monday for comment on Manchester's statement.

Manchester was named a defendant in the suit, along with Provident Premier Master Fund Ltd., Portside Growth and Opportunity Fund, Elliott Management Corp., Gemini Investment Strategies LLC, Ramius Capital LLC and Gemini Master Fund Ltd.

Manchester Securities is a New York-based investment firm controlled by Elliott Associates LP.

Omni Energy, based in Carencro, La., provides onshore seismic data and transportation services to oil and gas companies. On Monday, the company's stock closed down $0.03 at $1.31.

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