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Contact: Mark Kollar
Broadgate Consultants, Inc.
212-232-2222
AURORA FOODS SETTLES SHAREHOLDER LAWSUITS ALLEGING ACCOUNTING IMPROPRIETIES
UNDER FORMER MANAGEMENT
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ST. LOUIS -- January 16, 2001 -- Aurora Foods Inc. (NYSE:AOR) today announced
it has reached a preliminary agreement to settle the securities class action and
derivative lawsuits pending against the Company and its former management team
in the US District Court in the Northern District of California. These actions
were commenced in the wake of Aurora's disclosure on February 18, 2000, of
accounting irregularities at the Company and the resignation of the Company's
former senior management team.
In a joint statement from Aurora management, Richard Dresdale, Chairman,
and James Smith, President and Chief Executive Officer, said, "This settlement
is another important step in Aurora's accelerating recovery and turnaround.
Today we are closing an important chapter on the issues related to the Company's
earnings restatement last spring and any obligations arising from the actions
that took place under prior management. The Company can now focus exclusively
on the new programs that are producing the strong and meaningful recovery that
is now underway. We expect to continue our progress and deliver strong value to
our shareholders."
Under terms of the agreement, Aurora will pay the class members $26 million
in cash and $10 million in common stock. Separately, the Company has entered
into a preliminary agreement with certain members of former management to
transfer between approximately 3 million and 3.6 million shares of Aurora common
stock to the Company, in consideration for a resolution of any civil claims that
the Company may have, and partially conditioned upon future events and
circumstances.
The cash component of the settlement with the Company's shareholders will
be funded entirely by the Company's insurance. With respect to the stock
component of the settlement, the stock received from former management would be
sufficient, at current share prices, to satisfy Aurora's obligation without
issuing additional shares. The actual number of shares needed to fund this
component will be based on average share prices determined at later dates.
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In addition, the Company has agreed to continue to implement certain
remedial measures, including the adoption of an audit committee charter, the
reorganization of its finance department, the establishment of an internal audit
function and the institution of a compliance program, as consideration for
resolution of the derivative litigation.
ABOUT AURORA FOODS INC.
Aurora Foods Inc., which is based in St. Louis, is a leading producer and
marketer of premium branded food products including Duncan Hines(R) baking
mixes, Log Cabin(R) and Mrs. Butterworth's(R) syrup, Van de Kamp's(R) and Mrs.
Paul's(R) frozen seafood, Aunt Jemima(R) frozen breakfast products, Celeste(R)
frozen pizza, Chef's Choice(R) frozen skillet meals and Lender's(R) bagel
products. For more information, visit the Company's Web site,
http://www.aurorafoods.com.
Statements contained in this press release that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. All forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ from the
forward-looking statements contained in this release and that may affect the
Company's prospects in general are described in the Company's filing with the
Securities and Exchange Commission.
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