Case Background
On January 14, 2019, a class action lawsuit was been filed on behalf of those who purchased or otherwise acquired Maxar Technologies Inc. (“Maxar”) (NYSE: MAXR) securities between March 26, 2018 and January 6, 2019, both dates inclusive (the “Class Period”).
The complaint alleges that throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that: (i) Maxar improperly inflated the value of its intangible assets, among other accounting improprieties; (ii) Maxar’s highly-valued WorldView-4 was equipped with CMGs that were faulty and/or ill-suited for their designed and intended purpose; and (iii) as a result, Maxar’s public statements were materially false and misleading at all relevant times.
Maxar is a leading global provider of advanced space technology solutions for commercial and government markets including satellites, Earth imagery, geospatial data and analytics. On October 5, 2017, Maxar (doing business under the name MacDonald, Dettwiler and Associates Ltd. at the time) purchased DigitalGlobe, Inc. (“DigitalGlobe”), an American commercial vendor of space imagery and geospatial content, for $2.4 billion dollars. As part of the purchase, Maxar acquired DigitalGlobe’s satellites, called the “WorldView Legion,” including the WorldView-4 satellite (“WorldView-4”).
On August 7, 2018, Spruce Point Capital Management (“Spruce Point”) published a research report on Maxar. The report alleged, in part, that Maxar “has pulled one of the most aggressive accounting schemes Spruce Point has ever seen to inflate Non-IFRS earnings by 79%.” Specifically, the report asserted that Maxar used its acquisition of DigitalGlobe “to inflate [its] intangible assets” and had “amended its post-retirement benefit plan to book one-time gains” in a manner that “was not fully disclosed across its investor communications. On January 7, 2019, Maxar disclosed that WorldView-4 experienced a failure in its CMGs, preventing it from collecting imagery due to the loss of an axis of stability. It was further disclosed that the WorldView-4 satellite will likely not be recoverable and will no longer produce usable imagery. Following this news, Maxar’s stock price fell $5.69 per share, or 48.5%, over the subsequent two trading days, to close at $6.03 per share on January 8, 2019.
Current Status of Case
On December 6, 2019, defendants filed a motion to dismiss the action and that motion has now been fully briefed before the Court pending its decision.
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