Newpark Settles Lawsuit, SEC Investigating Earnings Restatement
Newpark Resources, Inc. has reached settlements with the plaintiffs in shareholder class action and derivative litigation. As in all shareholder class and derivative actions, the settlement is subject to court approval. Once approved, the settlements will resolve all class and derivative litigation against the Company, its former and current directors, and former officers.
During 2006, several securities class action lawsuits and derivative actions were filed against the Company, certain current and former directors, and former officers of the Company. These actions were commenced following the Company's disclosure of an internal investigation into potential irregularities in the processing and payment of invoices at one of its subsidiaries, Soloco Texas, LP ("Soloco"), and alleged improper granting, recording and accounting of backdated grants of stock options to executives.
Under the terms of the settlement, Newpark will pay $1,550,000, and the Company's directors and officers' liability insurance carrier will pay $8,300,000. Both amounts include the cost of certain legal fees and administration costs. As part of the settlement, the Company is preserving certain claims it may have against its former CEO and CFO for matters arising from the potential invoicing irregularities at Soloco and the backdating of options. Newpark will accrue its share of the settlement costs, along with the legal fees incurred to conclude this settlement, in the first quarter of 2007.
Paul Howes, Newpark's President and Chief Executive Officer, stated, "We are extremely pleased to have our shareholder litigation settled. This removes the uncertainty that is inherent in any litigation and allows us to focus 100% of our energy on increasing shareholder value here at Newpark."
Separately, Newpark has been notified by the Atlanta Regional Office of the Securities and Exchange Commission that it has opened a formal investigation into Newpark's restatement of earnings. The Company continues to cooperate with the Securities and Exchange Commission's investigation of the events giving rise to the shareholder lawsuits.
Newpark Resources, Inc. is a worldwide provider of drilling fluids, temporary worksites and access roads for oilfield and other commercial markets, and environmental waste treatment solutions.
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