A proposed class-action is suing the Trustee of the Isagenix Worker Inventory Possession Plan. The Plan is made up of present and former Isagenix workers.
The precise variety of Plan contributors isn’t supplied however was estimated to be simply over 550 again in December 2019.
Plaintiff Shana Robertson is in search of to symbolize Plan contributors in a proposed class motion.
The named defendant in Robertson’s lawsuit is Argent Belief Firm, a for-profit company integrated in Tennessee.
At challenge is a commerce Argent executed by way of the Isagenix Worker Inventory Possession Plan (ESOP, “the plan”).
As per the ESOP, on June 14th, 2018,
Argent, in its capability as Trustee of the Plan, bought 30,000 shares of Isagenix’s most popular inventory for $382,500,000, representing a 30% possession curiosity in Isagenix.
The paid quantity involves $12,750 a share.
The Plaintiff former worker claims to have had no prior data of the acquisition.
Moreover;
Isagenix supplied monetary projections to Argent for the valuation for the ESOP Transaction.
The monetary projections had been unreasonably optimistic.
The ESOP Transaction was structured as a purchase order of most popular inventory fairly than frequent inventory with the intention to inflate the acquisition worth paid by the ESOP.
On the opposite finish of the commerce had been Jim Coover, Kathy Coover and Tammy Pierce.
The Coovers are Isagenix’s co-founders. Along with Pierce, they’re Isagenix shareholders and sit on the board of administrators.
The ESOP Transaction allowed the promoting shareholders, Jim and Kathy Coover and Jim and Tammy Pierce, to money out a portion of their Isagenix inventory at a excessive worth at a time when Isagenix’s enterprise was deteriorating and likewise positioned extreme debt on the corporate.
To fund the acquisition, the Plan took out a mortgage with Isagenix for the acquisition quantity $382,500,000.
The phrases of the mortgage would see the Plan repay Isagenix ‘over 39 years in equal annual funds at an rate of interest of three.05%’.
Appears a bit unusual to me to borrow cash from an organization to purchase shares in mentioned firm however the lawsuit doesn’t make something of it.
Admittedly I’m not effectively versed sufficient on this specific space of finance to make a definitive name.
In any occasion, to finance the mortgage Isagenix turned to 3 funding companies.
The ESOP Transaction positioned extreme debt on Isagenix.
By 2020, the Coovers and the Pierces had been pressured to inject $35 million into Isagenix to keep away from default on the Inside ESOP Mortgage and the Exterior ESOP Mortgage.
In 2020, Isagenix used this cash and different funds to retire over $60 million of the principal quantity of the Exterior ESOP Mortgage at roughly sixty-five (65) cents on the greenback.
After paying $12,750 a share in June 2018;
On December 30, 2018, the Plan’s Isagenix inventory was valued at $6,051.15 per share.
On December 29, 2019, the Plan’s Isagenix inventory was revalued at $3,648.71 per share.
The December 29, 2019 valuation represents a decline of over 70% from the acquisition worth paid by the ESOP.
The lawsuit alleges, on account of the commerce;
The Plan paid greater than truthful market worth for Isagenix inventory as a result of flawed valuation of the corporate.
Argent didn’t carry out due diligence in the midst of the ESOP Transaction just like the due diligence that’s carried out by third-party patrons in massive company transactions.
Argent’s due diligence within the ESOP Transaction was much less intensive and thorough than the due diligence carried out by third-party patrons in company transactions of comparable dimension and complexity.
The Plan overpaid for Isagenix inventory within the ESOP Transaction as a consequence of Argent’s reliance on unrealistic development projections, unreliable or out-of-date financials, improper low cost charges, inappropriate guideline public firms for comparability, and/or its failure to check assumptions, failure to query or problem underlying assumptions, failure to use a reduction for lack of management, and/or different elements that rendered the valuation of Isagenix inventory within the ESOP Transaction defective.
Argent has acquired consideration for its personal private account from Isagenix for its providers within the ESOP Transaction within the type of charges.
Argent failed to satisfy its ERISA duties, as Trustee and fiduciary, to the Plan and its contributors, together with Plaintiff.
The Plaintiffs lawsuit seeks to get better
the distinction between the worth paid by the Plan and the precise worth of Isagenix shares on the time of the ESOP Transaction.
It’s value noting that the lawsuit is gentle on proof. The Plaintiff states with respect to most of their allegations, that they
will doubtless have evidentiary help after an affordable alternative for additional investigation or discovery.
Robertson’s lawsuit was filed on Simply eighth in Georgia’s Northern District.
Apart from some administrative filings, there haven’t been any important developments since submitting.
I’ve added the Isagenix ESOP lawsuit to our docket calendar. Keep tuned for updates as we proceed to watch the case.
Replace fifth October 2021 – In mid September Shana Robertson filed a Discover of Voluntary Dismissal.
The courtroom accepted the discover and terminated Robertson’s case on September twentieth.