Capital Markets

At Nash, “Fresh Start” Begins by Settling Suit

Food distributor, paying $6.75 over claims of false statements after an acquisition, sees the deal as part of its strategic plan.
Stephen TaubMarch 12, 2008

Nash Finch Co. agreed to pay $6.75 million to settle a class action lawsuit that had stemmed from statements it made about an acquisition of two Roundy’s Supermarkets distribution divisions.

Putting the suit behind it, said the CEO, will help the Minneapolis-based food distributor concentrate on its “Operation Fresh Start” strategic plan.

Nash Finch was initially the target of two class action lawsuits stemming from its acquisition of the Roundy’s divisions, but one complaint was voluntarily dismissed two years ago.

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The remaining complaint had alleged that the company and certain executive officers issued false statements about, among other things, the integration of the distribution divisions, the performance of its core businesses, its internal controls, and its financial projections. Holders said the false statements had been designed to artificially inflate the price of Nash Finch’s stock.

The company said in a press release that it denies engaging in any wrongdoing, and added that the payment to settle the suit will be fully funded by the company’s insurance coverage.

“We believed, and continue to believe, that this case lacks merit and had planned to defend the litigation vigorously,” said Alec Covington, president and CEO. “However, after reaching an accommodation that will be fully covered by our directors and officers insurance and is acceptable to our insurance carrier, we have agreed to the settlement so that we can eliminate the distraction and expense of further litigation. We believe that our shareholders are best served with this matter behind us and our attention focused on our business and the implementation of our strategic plan, Operation Fresh Start.”