What: Shares of Rayonier Advanced Materials Inc plunged a whopping 55% today after a contract dispute with a customer was taken to court.
So what: Rayonier has sued its customer, Eastman Chemical Company, in an effort to enforce a contract the company has to supply cellulose specialty products. Eastman is trying to get out of portions of the contract on the "meet or release" provisions, which is why Rayonier is suing.
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This is a big deal for Rayonier because Eastman Chemical Company was its largest customer last year, accounting for 31% of sales.
Now what: Any time companies get into a dispute like this, it'll be bad for shareholders, and today is no different. At the very least, both companies will spend millions to litigate this case in court unless it can be resolved quickly. Given the uncertainty, I think this is a stock worth staying away from right now because we don't know how this dispute will impact the company.
Keep an eye on potential settlements but understand that Rayonier has a lot more to lose than Eastman Chemical does. Right now, that's a bad position to be in for shareholders.
The article Why Shares of Rayonier Advanced Materials Inc Plunged 55% Today originally appeared on Fool.com.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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