EnergySolutions seeks to settle $26M lawsuit over IPO
EnergySolutions Inc. has asked a federal judge to approve a $26 million settlement to resolve claims the company intentionally misled investors in connection with its initial public offering of stock in 2007.
Mark Walker, spokesman for the Salt Lake City-based nuclear waste disposal company, on Wednesday acknowledged the request, but said EnergySolutions would have no more comment on the proposed deal.
In October, EnergySolutions reached an agreement to settle the suit filed in 2009 by several pension fund plaintiffs in U.S. District Court for the Southern District of New York, according to a document the company filed with the Securities and Exchange earlier this month.
The suit contended that EnergySolutions, its officers and directors made false and misleading statements about the company's financial condition and its future business opportunities in order to artificially inflate the value of its stock at the time of the IPO.
The agreement, which was later presented to the court, did not contain an admission of guilt by the company or any of its officers.
EnergySolutions went public in November 2007, raising $690 million by selling 30 million shares of its stock for $23 apiece. A secondary offering raised another $665 million by selling an additional 35 million shares at $19 a share.
Even though the settlement represents just under 2 percent of the proceeds from the two offerings, the plaintiffs said $26 million was a fair amount and urged the judge to approve it.
"The ... proposed settlement is a very good result ... when considering the risk of much less or no recovery if the case proceeded through class-[action] certification, summary judgement, trial and perhaps appeals," the plaintiffs said in a document filed Monday.
Earlier this month, EnergySolutions told the SEC that the agreement "is not expected to have a material adverse effect on our financial position, results of operations or cash flows."
It isn't clear how Wall Street views the agreement. On Wednesday, EnergySolutions' stock closed at $2.97 a share, up 10 cents, or 3.5 percent, in light trading. The stock has lost 87 percent of its value since the IPO.
The suit dates to October 2009. Over the ensuing three years, the company attempted twice to get the judge to dismiss the case. In September 2011, the judge threw out some allegations but upheld others.
The case produced more than 625,000 documents, according to the court.