Class action lawsuit filed against storage company Eos

A class action lawsuit has been filed Eos Energy Enterprises that alleges that the energy storage company made “materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects”.

The lawsuit was filed by class action law firm Glancy Prongay & Murray LLP in the United States District Court for the District of New Jersey. The case, ‘Houck v. Eos Energy Enterprises’, has been filed on behalf of persons and entities that purchased or otherwise acquired Eos securities between 9 May, 2022 and 27 July, 2023.

Specifically, the lawsuit alleges that Eos failed to disclose to investors that Bridgelink Commodities, a company that is responsible for 45 per cent of Eos’ backlog is “connected to a group whose assets were seized by a creditor and sold in an auction” and that, as such, Bridgelink’s commitment and ability to purchase Eos products was “not as secure as Eos had led investors to believe”.

Consequently, the lawsuit alleges that Eos’ backlog was overstated and that the overstatement “negatively impacts” Eos’s ability to secure the loan it has applied for via the Department of Energy’s Loan Programs Office. The lawsuit also claims that, as a consequence, Eos’ positive statements about its business, operations, and prospects were “materially misleading and/or lacked a reasonable basis”.

Last week, Eos issued a statement seeking to reassure investors that customers representing a significant proportion of its backlog were financially sound companies following allegations that Eos had large contracts with companies that were unlikely to honour their obligations.

In the statement, Eos referred to reports concerning “legal proceedings involving multiple Bridgelink legal entities”. The statement added that Eos Energy “believes that its customer, Bridgelink Commodities, LLC, is a separate legal entity which is not implicated in the legal matters” highlighted by reports. 

The statement went on to say that Bridgelink Commodities, which represents 45 per cent of Eos Energy’s backlog, had “reconfirmed that it continues to build pipeline and is actively seeking financing for energy storage projects covered by Eos’s multi-year master supply agreement”.

The financial position of Bridgelink Commodities has been the subject of scrutiny by Iceberg Research.

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