Diamond Foods Reports Proposed Pact to Settle Private Class Action Suit, Will Pay $11M, Will Issue 4.45M Shares; Reports Prelim. Q4 Sales $196-201M vs $188M Est.
Diamond Foods, Inc. (Nasdaq: DMND) ("Diamond") today announced that it has reached a proposed agreement, subject to Court approval, to settle the private securities class action pending against the Company and two of its former officers.
Under the terms of the proposed settlement, Diamond would pay a total of $11 million in cash and issue 4.45 million shares of common stock to a Settlement Fund to resolve all claims asserted on behalf of investors who purchased or otherwise acquired Diamond stock between October 5, 2010 and February 8, 2012. The proposed settlement further provides that Diamond denies all claims of wrongdoing or liability.
A substantial portion of the $11 million in cash would be funded by Diamond's insurers. With respect to the 4.45 million shares of common stock, Diamond would have the ability to privately place, or conduct a public offering of, the shares with the consent of the lead plaintiff and its counsel, prior to distribution of the Settlement Fund. In that event, the Settlement Fund would include the proceeds of the offering in lieu of the settlement shares.
If this proposed settlement is approved by the Court, a notice to the Class members will be sent with information regarding the allocation and distribution of the Settlement Fund and instructions on procedures to follow to make a claim on the Settlement Fund.
"We believe this proposed settlement eliminates the burden of further time, expense and risk related to the class action, allowing the Diamond team to move forward fully focused on expanding the reach of our leading brands and executing on our strategic and operational initiatives for growth," stated Brian J. Driscoll, Diamond's Chief Executive Officer. "We continue to strengthen our business and are pleased that our fourth quarter performance enables us to complete fiscal year 2013 in an improved financial position."
The Company also announced unaudited preliminary fourth quarter and full year fiscal 2013 expectations for net sales, gross margin and adjusted EBITDA as follows:
Fiscal 2013 Fourth Quarter Full Year Net Sales $196 to $201 million $860 to $865 million Gross Margin 25.5% to 27.0% 23.5% to 24.0% Adjusted EBITDA $21 to $24 million $98 to $101 million
Note: Adjusted EBITDA, a non-GAAP financial measure, for the fourth quarter of fiscal 2013 excludes the warrant liability loss, consulting fees, legal expenses, and other costs. Adjusted EBITDA for full year fiscal 2013 also excludes restatement related accounting and legal expenses, Fishers plant closure and other costs.
The Company does not plan to provide preliminary financial information in the future other than in unique circumstances, or in the event of a material event that requires disclosure. The Company plans to release fourth quarter and full year fiscal 2013 earnings in late September.
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