NEW CASES

Company: Agria Corporation (NYSE:GRO)

Agria Corporation (“Agria” or the “Company”) engages in the research and development and production and sale of upstream agricultural products in the People’s Republic of China. On November 6, 2007 Agria conducted an Initial Public Offering of stock (“IPO”), raising roughly $282 million by selling 17.15 million shares of common stock at $16.50 per share, which was viewed as a success for Agria and its selling shareholder, Brothers Capital Limited (“BCL”).    In the IPO’s Registration Statement, Agria made several claims about its operations and finances, including:

1. 1. “If one or more of our key management personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all.  The loss of the services of our key management personnel, in the absence of suitable replacements, could have a material adverse affect on our operations and financial condition, and we may incur additional expenses to recruit and train personnel.  Each member of our management team has entered into an employment agreement with us.” 

1. 2. The Registration Statement touts management’s expertise, and lists Mr. Xue’s experience, identifying his importance to Agria as Chief Operating Officer (“COO”).

1. 3. Further, with regards to Agria’s senior officers: “We have entered into employment agreements with each of our senior executive officers.”

On April 7, 2008, Agria shocked investors when it announced that its auditors were unable to begin their audit of the Company’s financial statements for 2007 due to various accounting and payment issues. The Company warned that “given the substantial delay in the commencement of the audit process, there is a risk that the Company may not be able to file its Annual Report” on time, and retracted its previously provided guidance for the fourth quarter of 2007, and first quarter and full year of 2008.

The Company also announced that its COO had resigned. Further, the Company disclosed for the first time that its Chief Executive Officer was actively involved in protracted compensation negotiations with the COO and other key executives. These executives stood to receive $18 million in cash and transfer of Company shares (which represented 22% of the Company) so as to “provide incentive for their continuing service and align their interests with those of the shareholders.”

Upon the release of this news, shares of the Company’s securities declined $3.34 per share, or almost 38 percent, to close on April 8, 2008 at $5.46 per share, on unusually heavy trading volume.

The Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company had failed to secure enforceable employment agreements with its COO and other key executives prior to its IPO; (2) that the Company was in active negotiations with its COO and other key executives to provide multi-million dollar compensation packages in order to secure their future services (which were key to the Company’s future success); (3) that these dramatically increased compensation expenses would materially impact the Company’s financial results going forward, specifically by increasing its general and administrative expenses, and decreasing its operating profit and margins; (4) that, as a result of the above, the Company’s financial results following its IPO would in no way be analogous to the financial statements provided in its Registration Statement; (5) that the failure of the Company to successfully negotiate enforceable employment agreements with its COO and other key executives would significantly affect its ability to execute its stated operating strategies due to the executives’ critical importance to the Company; (6) that various accounting and payment issues, which existed at the time of the IPO, would subsequently prohibit the Company’s auditors from completing its audit of the Company’s financial statements; and (7) that the Company lacked adequate internal and financial controls.

Class Period:  All persons who purchased or otherwise acquired securities of Agria pursuant or traceable to the Company's November 6, 2007 IPO.

Please contact us if you would like to discuss our investigation.

Nancy Kaboolian
Partner
P: 212.889.3700
E: nkaboolian@abbeyspanier.com