Force Protection Inc. has agreed to pay $24 million to settle a shareholder class action that accused the Ladson armored-vehicle maker of misleading investors, the company said Friday.
A majority of the settlement will be covered by insurance, the company said. It is subject to court approval.
The suit, In re Force Protection, Inc. Securities Litigation, is pending in the U.S. District Court for the District of South Carolina, Charleston Division, against the company and several of its former directors and officers.
The first of 10 related class actions was filed March 10, 2008, on behalf of investors who bought the company’s stock between Aug. 14, 2006, and Feb. 29, 2008, according to the company’s most recent annual report. The plaintiffs alleged that the defendants violated the Securities Exchange Act and made false or misleading public statements or omissions about the company’s business, internal controls and financial results. The suits were consolidated in June 2008, and the court denied the defendants’ motion to dismiss in September 2009.
The class period ends Feb. 29, 2008, the day Force Protection said it would restate its previously reported financial statements for the third quarter and first nine months of 2007 and delay its annual report.
Force Protection also agreed to settle a related shareholder derivative suit in the same federal court. Under that deal, the company will adopt certain corporate governance practices, receive $2.25 million from insurance and pay the plaintiffs’ attorneys’ fees and expenses of no more than $2.3 million. That settlement also needs court approval.
Neither the company nor any of its current or former directors or officers admitted wrongdoing or liability, the company said. It said the parties settled to avoid protracted and expensive litigation.
Related derivative suits are pending in state courts in Nevada and South Carolina. The company said it believes court approval of the federal derivative settlement would extinguish them.
Force Protection expects to record a cash-related charge of about $8.5 million in its third-quarter results to reflect the net cost of the settlements.
The company makes the Buffalo and Cougar blast-protected vehicles. It had about 1,170 employees at the end of 2009, including about 350 field service representatives, and reported 2009 net sales of $977.1 million, down 26% from 2008, according to its annual report.
