Celestica to Pay $30M to Settle Class Action over Disclosures

Canadian electronics maker Celestica Inc. has reached a $30 million settlement to end a long-running U.S lawsuit filed by shareholders that accused the company of committing securities fraud by falsifying its warehouse data and other fiscal factors.

The deal will put end to nearly eight years of litigation over whether the public fillings of the company contained misleading statements about its financial health and restructuring costs from January 2005 to January 2007.

The shareholders allege Celestica Inc. that they suffered significant damages as the shares traded at an inflated price during this time collapsed when the company disclosed the true figures of its restructuring and a disappointing quarterly outlook. In particular their accusations were against former Chief Executive Stephen Delaney and former Chief Financial Officer Anthony Puppi who were overvaluing the company’s health. Craig Muhlhauser had replaced Delaney. When Muhlhauser called the situation an “absolute disaster”, the company stock value fell roughly 23 percent.

The preliminary all-cash settlement was filed with the U.S. District Court in Manhattan on April 17, and is pending court approval. There was no immediate comment from Celestica. All of the defendants turned down wrongdoing in agreeing to settle, according to court papers.

The lead plaintiffs are the Ontario-based Drywall Acoustic Lathing and Insulation Local 675 Pension Fund, and the New Orleans Employees’ Retirement System. The class is represented by Labaton Sucharow. It plans to seek legal fees not surpass 30 percent of the settlement fund, according to court papers.

Shares of Celestica closed down 33 cents at C$13.93 on April 17 trading in Toronto. The settlement was made public after U.S. markets closed.

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