Zapata zapped with lawsuit

Just weeks after Zapata announced it was backing out of plans to acquire or invest in 31 Internet companies, the fish-oil processing and food service company was slapped today by a shareholder suit charging that Zapata and its executives made false and misleading statements about implementing its Internet strategy.

A class action lawsuit was filed in the United States District Court for the Southern District of Texas on behalf of all purchasers of the common stock of Zapata from July 6, 1998 through Oct. 15, 1998.

The complaint also alleges that certain of the Zapata officers and directors took advantage of the inflated price of the company's stock by selling more than $5.6 million of their company holdings at peak prices.

The plaintiff is seeking to recover damages on behalf of class members and is represented by the law firm of Schiffrin Craig & Barroway.

Zapata, through its subsidiary Zap, had planned to enter the Internet space by creating a portal that its executives had characterized as the "roach motel"--eyeballs check in but they don't check out. The game plan entailed spinning off Zap in an initial public offering.

But as the global markets slumped, especially hitting Internet stocks, Zapata canceled its plans to invest in or acquire such companies as Web community CoolChat, games information site Attitude Network, personal finance and investment Webzine Green, online college resource site GoCollege, and online community Bianca Troll Productions.