Former high-flyer Zap Corp., the Internet subsidiary of
oil-drilling company Zapata Corp., has been hit with two class action
shareholder lawsuits on the heels of its decision to cancel plans to snap
up Internet properties.
The two lawsuits were both filed earlier this week in U.S. District Court
in Texas. The plaintiffs are seeking to recover unspecified monetary damages.
“On Oct. 15, Zapata disclosed that it would not be pursuing a single one of
its acquisitions it had so vigorously touted… and revealed that it had
abandoned its Internet strategy. As a result (between July 6 and Oct. 15)
the price of Zapata stock collapsed from $21.50 to $6.875 a share.
“Zapata’s insiders, however, took advantage of the run-up in the price of
Zapata’s stock before the Oct. 15 announcement, selling off more than $5.6
million of their Zapata holdings at peak prices,” one complaint alleges.
Zap shares stood at 7-5/16 in late-morning trading.
Zap.com, the Web site Zapata was aiming to
turn into the portal, now displays a message saying the site is being
redesigned and invites visitors to go to the Word and Charged webzines.
Calls to a Zapata spokesperson seeking comment on the lawsuits were not
returned.