US: SEC looks at Molson-Coors' books
The newly-merged Molson Coors Brewing Co has been approached by federal regulators. A filing with the Securities and Exchange Commission (SEC) today (9 June) said that regulators have asked the company to provide documents and other information about the merger earlier this year of Adolph Coors and Molson.
The company also confirmed in the filing that several class-action lawsuits were filed last month against the company in the US and Canada, alleging that Molson Coors and some of its officers and directors misled shareholders by not disclosing first-quarter business trends before shareholders voted on the merger in January and February.
The company "believes that the lawsuits are without merit and will vigorously defend them," the filing said.
The SEC told the brewer that its request for merger documents should not be viewed as an indication that any laws were broken, Molson Coors said. The company added that it is cooperating with the SEC's inquiry, which also requests information about its first-quarter financial results.
At the end of April, Molson Coors reported a first-quarter loss of US$46.5m, mainly due to special charges from the merger and lower sales in each of its four key markets. Excluding one-time items, it said its loss came to US$5.1m. On 2 May, however, Molson Coors revised the adjusted loss to US$8.4m to reflect a change in how it accounted for a minority interest Brazilian shareholder.
One of the legal complaints against Molson Coors alleged that, in order to get the necessary shareholder approval for the merger between the two brewers, defendants failed to disclose that, at the time the merger, "Coors was not operating according to plan and had experienced material adverse changes in its business."
It also claimed that the defendants violated the terms of the merger agreement by failing to disclose that Coors's business "was being, and foreseeably would continue to be, adversely impacted by conditions that were causing Coors to perform well below plan and consensus estimates."
"Defendants concealed these material facts because it enabled them to effectuate the merger in a manner that allowed the relatives and heirs of the Coors and Molson families to dominate the combined company, as detailed in the complaint," the complaint added.
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