Diamond Foods Announces Proposed Agreement to Settle Private Securities Class Action
August 21 2013 - 8:25AM
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.
About Diamond Foods
Diamond Foods is an innovative packaged food company focused on
building and energizing brands including Kettle® Chips, Emerald®
snack nuts, Pop Secret® popcorn, and Diamond of California® nuts.
Diamond's products are distributed in a wide range of stores where
snacks and culinary nuts are sold. For more information visit our
corporate web site: www.diamondfoods.com.
Note Regarding Forward-looking Statements
This press release includes forward-looking statements,
including projections as to net sales, gross margin, Adjusted
EBITDA, benefits of settling litigation, progress on strategic
initiatives, Court approval of the settlement of the securities
class action litigation and the possibility of offering the
settlement securities to a private purchaser or the public.
We have based these forward-looking statements on our assumptions,
expectations and projections about future events only as of the
date of this press release, and we make such forward-looking
statements pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Many of our
forward-looking statements include discussions of trends and
anticipated developments under the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of the periodic reports that we file with the
SEC. We use the words "anticipate," "believe," "estimate,"
"expect," "intend," "plan," "seek," "may" and other similar
expressions to identify forward-looking statements. You also should
carefully consider other cautionary statements elsewhere in the
reports and in other documents we file from time to time with the
SEC. We do not undertake any obligation to update forward-looking
statements to reflect events or circumstances occurring after the
date of this report. Actual results may differ materially from what
we currently expect because of many risks and uncertainties,
including: the failure to obtain preliminary or final Court
approval of the proposed settlement or delay in obtaining such
approval; risks related to decisions by stockholders to opt out of
or object to the proposed settlement; the dilutive impact of the
issuance of the proposed settlement shares on our stock price; the
potential impact on our stock price of sales of the proposed
settlement shares into the public market; risks relating to our
leverage and its effect on our ability to respond to changes in our
business, markets and industry; increase in the cost of our debt;
failure to comply with debt covenants; inability to raise
additional capital and the possible dilutive impact of raising such
capital; risks relating to litigation and regulatory proceedings;
uncertainties relating to relations with growers; availability and
cost of walnuts and other raw materials; increasing competition and
possible loss of key customers; and general economic and capital
markets conditions.
CONTACT: Investors:
ICR
Katie Turner
415-230-7952
Media:
ICR
Anton Nicholas
Jessica Liddell
415-445-7431
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