Preliminary Settlement of Escala Class Action
Escala Group, a global collectibles company dealing in stamps, coins, precious metals trading, and art and antiques, has announced a preliminary settlement of the class action suit and shareholder derivative action launched in May 2006.As part of the derivative settlement, the Company will recover $5.5 million from insurers on behalf of certain of the named defendants on both proceedings. The Company has also agreed to adopt certain corporate governance policies and procedures, and to pay all court-approved attorneys' fees, up to a maximum of $925,000, together with approved expenses not to exceed $70,000. The Company's insurer will fund $475,000 of these amounts.
The proposed settlement of the class action litigation provides for the Company to contribute an aggregate of $6 million in cash and 4 million newly issued shares of its stock to a settlement fund for the benefit of the class; provided that if the average closing price per share on the scheduled date of distribution is less than $2, the Company will issue additional shares so that the total value of the shares issued is $8 million. In the event the average closing price per share on the scheduled date of distribution is below $2 (and in certain other circumstances), the Company has the right to substitute cash for stock. A substantial portion of the cash contribution will be funded by insurers.
The Company's net cash payment obligations under the proposed settlements, after taking into account recoveries, is approximately $1 million.
SEPT-23-08-30-08: Court Grants Preliminary Approval of Settlement of Escala Group [MARKET WATCH: ESCALA SETTLEMENT]
