Investors seek millions in compensation, citing failures to make material disclosures and misrepresentations in relation to company's business and operations
TORONTO, Dec. 6 /CNW/ - Investors who sold common shares of Protective Products of America, Inc. ("PPA") between August 14, 2009 up to and including January 13, 2010, and all investors holding PPA shares as of January 14, 2010 have launched a $120 million dollar class action suit against PPA's former directors and officers as well as the company's Florida-based investment bank, Farlie Turner & Co., and its affiliate Bayshore Partners, LLC.
PPA's shares were publicly traded on the Toronto Stock Exchange until January 14, 2010, when trading was suspended following an announcement that the company had filed a voluntary assignment into bankruptcy in Florida for the purpose of selling substantially all of its assets to Protective Products Enterprises, an affiliate of private equity firm Sun Capital Partners. PPA was later delisted from the TSX on February 19, 2010.
Prior to its bankruptcy filing, PPA was carrying on its business of designing and manufacturing concealable and tactical body armour. Its primary customers and target market included agencies of the U.S. Government such as the U.S. Marines and the U.S. Army.
The Statement of Claim in the class action alleges that PPA's former directors and officers knowingly permitted negative misrepresentations and non-disclosure of positive material information about the company's business, operations, and capital, in order to depress its share price. PPA never disclosed, for instance, that the U.S. Army had awarded the company a contract on December 4, 2009, just over a month before the bankruptcy sale. Throughout 2008 and 2009, PPA had touted this U.S. Army contract as a highly valuable opportunity, potentially worth up to US$300,000,000.
It is further alleged that PPA's directors and officers conspired with Farlie Turner and Bayshore Partners, to depress PPA's share price in order to take the company private for the benefit of certain defendants. PPA's artificially low share price hindered the company's prospects for refinancing and recapitalization and made it a more attractive target for private equity firms.
The allegations raised in the claim have not yet been proven in court. The plaintiff and the prospective class members are represented by the firm of Rochon Genova LLP.
For further information: For further information:
John Archibald at [email protected].