Sonoco Products Company Case 6/26/2008
June 1, 2012 (Update) -- Proposed $13 million settlement.
According to the Notice:
Security and Time Period: Sonoco common stock (symbol “SON”) purchased between February 7, 2007 and September 18, 2007, inclusive.
Settlement Fund: $13,000,000 in cash plus any interest earned.Your recovery will depend on the timing of your purchases and any sales of Sonoco common stock during the Class Period. Based on the information currently available to Lead Plaintiff and the analysis performed by their damage consultants, it is estimated that if Class Members submit claims for 100% of the shares eligible for distribution under the Plan of Allocation (described below), the estimated average distribution per share will be approximately $0.48 before deduction of Court-approved fees and expenses, including the cost of notifying members of the Class and settlement administration. Historically, actual claims rates are less than 100%, which result in higher distributions per share. A Class Member’s actual recovery will be a proportion of the Net Settlement Fund determined by that claimant’s recognized claim as compared to the total recognized claims of all Class Members who submit valid Proof of Claim and Release forms (“Proof of Claim”).
Reasons for Settlement: Avoids the costs and risks associated with continued litigation, including the danger of no recovery.
June 26, 2008 -- According to a law firm press release, an institutional investor filed a class action lawsuit against Sonoco Products and certain of its officers and directors charging violations of the Securities Exchange Act of 1934. Sonoco Products manufactures industrial and consumer packaging products, and packaging services primarily in the United States, Europe, and Canada.
The complaint alleges that, during the Class Period, defendants issued a series of materially false and misleading statements concerning the Company’s financial performance and prospects. Specifically, the complaint alleges that these statements were materially false and misleading because defendants failed to disclose and/or misrepresented: (i) that the Company was losing market share to its competitors; (ii) that the Company was having operational difficulties in implementing its next generation of products; (iii) that the Company was experiencing weaker sales in its Engineered Carriers and Paper and Consumer Packaging segments, especially in North America; (iv) that the Company was distracted by the loss of a bid on a large contract, which resulted in decreased sales and price concessions on current contracts; (v) that the Company was having a difficult time in moving its old inventory; and (vi) that as a result of the forgoing, the Company had no reasonable basis for its 2007 earnings guidance.
On July 20, 2007, the Company announced its financial results for the second quarter of 2007, the period ended July 1, 2007. For the quarter, the Company reported earnings of $0.41 per diluted share, below analysts’ expectations. In response to this announcement, shares of the Company’s common stock fell $6.30 per share, or over 14%, to close at $38.00 per share, on heavy trading volume.
On September 18, 2007, the Company announced that it was reducing its third quarter 2007 base earnings estimate to a range of $0.55 to $0.58 per diluted share. Upon this news, shares of the Company’s stock fell $2.42 per share, or over 7%, to close at $30.78 per share, on heavy trading volume.