Published August 21, 2013
Diamond Foods Inc will pay about $96 million to settle a lawsuit related to the restatement of its results after an accounting scandal rocked the maker of Emerald Nuts and Kettle Chips last year.
Shares of the company, which also forecast higher-than-expected fourth-quarter sales, rose as much as 20 percent in morning trading on the settlement of the class action lawsuit.
Diamond said it will pay $11 million in cash and issue 4.45 million common shares to a fund to settle the lawsuit against the company and two of its former officers.
According to court documents, the settlement amount, subject to court approval, represents about 25-40 percent of what the lead plaintiffs saw as the maximum damages theoretically recoverable in this case.
Diamond has been trying to get past the scandal that claimed the jobs of its two top executives and caused its planned purchase of Pringles from Proctor & Gamble to fall apart.
The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement that wiped out $56.5 million in profit from fiscal 2010 and 2011.
The company said on Wednesday it denies any wrongdoing related to the claims, which were made on behalf of investors who acquired Diamond stock between October 5, 2010 and February 8, 2012.
Diamond also forecast sales of $196 million to $201 million in the fourth quarter.
Analysts on average were expecting sales of $187.4 million, according to Thomson Reuters I/B/E/S.
The company's shares, which have risen about 40 percent this year, were up 16 percent at $22.27 on Wednesday on the Nasdaq.
The case is Re Diamond Foods Securities Litigation, case number 3:11-cv-05386, in the U.S. District Court for the Northern District of California.
(Reporting by Chris Peters in Bangalore)