Premier Laser Plans to Settle 19 Suits for Nearly $14 Million
Premier Laser Systems Inc. said Wednesday that it has agreed to settle 19 class-action suits filed in recent months by disgruntled shareholders for almost $14 million.
The settlement still must be approved by the judges handling the federal and state lawsuits, but analysts said it appears to be a good one for the Irvine-based manufacturer of medical and dental laser systems and its shareholders.
Premier also said it is delaying its annual shareholders’ meeting by three weeks--to Feb. 26 from Feb. 5--in part to provide time to resolve the settlement issues. The company also said it has hired former Tandem Computer executive Robert V. Mahoney as chief financial officer.
Premier Laser’s stock rose 31 cents to close at $4.06 a share Wednesday in heavy trading on the Nasdaq market as word of the proposed settlement spread.
Company officials would not comment on the plan in the absence of Chairman and Chief Executive Colette Cozean, who was in New York on Wednesday, apparently wooing the financial community.
But industry analyst John Westergaard said it was “a reasonable settlement [that] won’t cost them any cash” and will end what could have been a tremendously expensive and time-consuming chain of litigation.
The suits were filed last year after Premier slashed its revenue estimates for 1998 and restated nearly two years of financial results to reflect lower sales and earnings than originally reported. The stock took a beating after the announcements.
The suits accused the company of issuing misleading information to inflate the stock price. Premier denies any wrongdoing and continues to believe the suits are without merit but is settling to avoid protracted litigation, the company said in a prepared statement.
The proposed settlement calls for the company’s insurance carrier to pay $4.6 million cash to the combined plaintiffs, while Premier would issue them 2.25 million shares of stock--increasing the number of common shares outstanding by almost 20% to a total of 13.7 million.
Pricing of the stock has not been determined, but the shares would be worth almost $9.4 million at Wednesday’s closing price.
In hiring Mahoney, 57, the company is signaling the market that it intends to pursue new investments and new business opportunities aggressively.
The financial executive’s last position was director of new ventures at Tandem, and before that he raised more than $80 million in financing for Interactive Network Inc. in San Jose.
He recently began working at Premier as chief accounting officer and will become CFO and an executive vice president Jan. 31, the company’s fourth chief financial officer since it went public in 1994.
He will replace Charles Olson II, 42, who was hired last year to help steer the company through its financial turmoil. Olson “was brought in to do a specific job, and he has done it well,” said a company spokesman.
Mahoney “has a very strong reputation,” particularly for helping companies find investment capital, said industry analyst Westergaard.
