Swisher Hygiene, shareholders propose $5.5M lawsuit settlement
02/06/2014 11:26 AM
02/06/2014 5:58 PM
Charlotte-based Swisher Hygiene has reached a preliminary settlement to end a class-action lawsuit with shareholders who claim the company inflated its stock price with misleading financial results, according to documents filed in federal court.
Under the terms of the settlement, shareholders would be eligible to receive a total of $5.5 million. The company continues to deny the shareholders’ allegations, according to the settlement.
“While we have been well represented by our counsel and confident of our litigation position, we believe putting this matter behind us is in the best interest of our customers, employees and shareholders so that we can remain focused on our business,” Swisher board Chairman Richard L. Handley said in a statement.
Lawyers for the plaintiffs did not return messages seeking comment Thursday. The settlement must still be approved by a judge.
The plaintiffs’ attorneys plan to petition the court for an award of up to 25 percent of the settlement to cover their fees, as well as $85,000 to cover their expenses.
Swisher was founded in Charlotte and enjoyed rapid growth until the Securities and Exchange Commission charged the company with accounting fraud in 2001. Swisher settled the civil lawsuit for $400,000, without admitting or denying guilt.
Then, in 2002, founder Patrick Swisher was sentenced to 2 1/2 years in prison after pleading guilty in a federal tax evasion case. He is no longer involved with the company.
Billionaire Florida businessman Wayne Huizenga and his business partner, Steve Berrard – the duo behind Blockbuster and Waste Management – bought the company in 2004. Swisher’s revenues shot up as the company acquired dozens of smaller hygiene and cleaning firms and listed its stock publicly.
But in 2012, the company ran into problems again. Swisher disclosed that its previous financial statements could no longer be relied upon, and it said its accounting had been inadequate to deal with the flood of acquisitions. The company restated its financials, resulting in $4.8 million more in losses for 2011 and sending its stock plummeting to below $1 a share.
Angry shareholders filed suit in March 2012, accusing the company and its executives of deliberately misstating its financial results to make it appear business was better than it was and inflate the stock price.
Swisher has continued to post losses. In November, at the end of its most recent quarter, Swisher said it lost $13.4 million, as revenue slipped 5 percent from the same quarter a year ago, to $56 million.
Swisher reported it had about $33 million in cash on hand at the end of the quarter, down from $61 million at the end of 2012.
In September, Swisher named board member William Pierce as CEO to help turn the company around.
Swisher’s stock closed at 48 cents a share, up 2 cents, on Thursday.
Staff researcher Maria David contributed.
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