NEW YORK (AP) — Shares of Diamond Foods rose in morning trading Wednesday after the San Francisco snack food company proposed to settle a securities lawsuit for about $96 million and forecast better-than-expected revenue for the most recent quarter and full year.
The company, which sells Kettle Chips, Emerald nuts and Pop Secret popcorn, is offering to pay $11 million in cash and issue 4.5 million shares to settle a proposed class action against the company and two former officials. The company's shares closed at $19.13 on Tuesday. Based on that price, the stock is worth $85.1 million.
Diamond said much of the cash payment would be covered by the company's insurance. The company said it denies all claims of wrongdoing or liability.
Diamond came under scrutiny in late 2011 over the way it accounted for payments to walnut growers. Some critics said the payments were used to inflate the company's annual earnings by shifting some costs into the new year. In early 2012 the company replaced its chief executive and chief financial officer after an internal investigation found the company improperly accounted for payments to walnut growers. Diamond also had to restate two years of financial results.
Diamond Foods was trying to buy potato chip maker Pringles at the time, but the bid collapsed.
The claims are being made on behalf of investors who bought the stock between Oct. 5, 2010 and Feb. 8, 2012. The proposed settlement is subject to court approval.
Diamond Foods Inc. also said it expects to report $196 million to $201 million in revenue for the fiscal fourth quarter ended in July, with full-year sales between $860 million to $865 million. The company plans to report results in September.
Analysts had projected $187.4 million in revenue for the quarter and $851.7 million for the full year, according to FactSet.
The company's shares jumped 17 percent, or $3.27, to $22.40 in morning trading. The stock is up nearly 64 percent in the year to date.