SunOpta investors file lawsuits over 'misleading performance'

The company, which last year extended its natural and healthy foods and ingredients businesses with deals in Mexico, Chile, Argentina and the Netherlands, among others, is facing class action lawsuits after over-valuation of its berry stocks, causing hefty pre-tax write-downs, came to light.

The latest class action, filed by New York-based law firm Murray, Frank & Sailer, alleges that stockholders in SunOpta who bought their shares during the period August 8, 2007 through January 25, 2008, were misled by the company about its financial performance.

"The complaint alleges that the defendants failed to disclose that SunOpta lacked adequate internal controls, improperly overstated SunOpta's earnings… and materially misrepresented that SunOpta's financial results were prepared in accordance with Generally Accepted Accounting Principles," the law firm said in a statement.

An earlier class action, filed on February 13 by Kaplan Fox & Kilsheimer, also of New York, adds that "the company shocked investors when it reported its anticipated financial results for 2007, disclosing for the first time that it expected to incur material write-downs and provisions in the range of $12m to $14m, which the company attributed to write-downs of inventory within the SunOpta fruit group's berry operations, as well as difficulties in collecting for services and equipment provided to a customer of the SunOpta bioprocess group."

The Toronto-based firm said on January 24 that it expected sales for fiscal 2007 to be slightly over $800m, more than its original estimations, but that earnings would be no more than $0.12 to $0.14 per share as a result of the $12 to $14m pre-tax write-downs.

Speaking to investors on January 25, SunOpta president Steve Bromley said that the company was doing all it could to address the 10-15 per cent over-valuation of its berry stocks, which it had only become aware of at the end of the year.

He added that the company had also started legal proceedings against its bioprocess partner, Abengoa.

The Spanish company uses SunOpta's technology under license to make biofuels, and the Canadian firm claims it has been doing so illegally in the US market.

The worse-than-expected results had also forced it to delay the proposed acquisition of Dutch firm Tradin Organics, Bromley added.

SunOpta's shares fell by $3.51 per share, around 37 per cent, on January 25 as a result of the announcement, and the company now faces more than a dozen class actions from various law firms alleging that it misled investors.

The company has declined to comment on any of the class actions.