Celestica settles US lawsuit over disclosures for $30M
(Reuters) – Celestica Inc has reached a $30 million settlement of a long-running U.S. lawsuit in which shareholders alleged that the Canadian electronics company committed securities fraud by misleading them about its financial health and restructuring costs.
The preliminary all-cash settlement was filed on Friday with the U.S. District Court in Manhattan, and requires court approval.
It resolves claims that Celestica, former Chief Executive Stephen Delaney and former Chief Financial Officer Anthony Puppi knew they were overstating the company’s health.
Shareholders alleged that Celestica’s stock price had been inflated because the Toronto-based company understated the costs of a 2005 restructuring by as much as 68 percent, understated operating costs, and overstated earnings and revenue.
The complaint sought damages on behalf of investors who bought Celestica shares on a U.S. stock exchange in the two years prior to Jan. 30, 2007, when the company disclosed higher restructuring costs and a disappointing quarterly outlook.
Shares of Celestica fell roughly 23 percent the following day, when Chief Executive Craig Muhlhauser called the outlook an “absolute disaster.”
Muhlhauser had replaced Delaney at the helm two months earlier, and remains chief executive. He was not a defendant.
Celestica had no immediate comment. All of the defendants denied wrongdoing in agreeing to settle, court papers show.
The lead plaintiffs are the Ontario-based Drywall Acoustic Lathing and Insulation Local 675 Pension Fund, and the New Orleans Employees’ Retirement System.
Labaton Sucharow, the law firm representing the class, plans to seek legal fees not exceeding 30 percent of the settlement fund, court papers show.
Shares of Celestica closed down 33 cents at C$13.93 in Friday trading in Toronto. The settlement was made public after U.S. markets closed.
The case is In re: Celestica Inc Securities Litigation, U.S. District Court, Southern District of New York, No. 07-00312. (Reporting by Jonathan Stempel in New York; Editing by Diane Craft)