On Friday, Under Armour, Inc. (NYSE:UA) disclosed that it has reached an agreement to settle the previously declared securities class action lawsuit with a payment of $434 million.

As per the terms, Under Armour is paying the amount to settle claims from purchasers of its publicly traded shares between September 16, 2015, and November 1, 2019.

The company also agreed to implement two governance changes for a specified period, as detailed in its 8-K filing with the SEC.

The lawsuit, initially filed in 2017, has been pending in the United States District Court for the District of Maryland.

Notably, Under Armour has consistently denied the accusations and agreed to this settlement to avoid the costs and risks of litigation, without admitting any fault or wrongdoing.

If approved by the court, the settlement will resolve all claims against Under Armour and other defendants in this case.

The company plans to pay the settlement using cash on hand or by drawing on its $1.1 billion revolving credit facility.

The company held $858.7 million in cash and equivalents as of March-end. 

The company stated that the previously recorded $100 million litigation reserve will increase to $434 million in the first quarter of fiscal 2025.

After the settlement, Under Armour expects to end fiscal 2025 with around $500 million in cash and no borrowings on its credit facility.

Mehri Shadman, Under Armour’s Chief Legal Officer and Corporate Secretary, said, “We firmly believe that our sales practices, accounting practices, and disclosures were appropriate, and deny any wrongdoing in this case.”

“Today’s announcement allows us to move past this more than seven-year-old matter so we can avoid the ongoing distraction of litigation and provide certainty to the business at a time when we are executing on important strategic priorities.”

Also Read: Under Armour Is Lagging Behind Peers Like Nike & Lululemon! Analyst Explains Why

Price Action: UA shares closed higher by 0.44% at $6.86 on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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