Maxar Technologies Inc.
- Company Name
- Maxar Technologies Inc.
- Stock Symbol
- Class Period
- March 29, 2018 to January 7, 2019
- Motion Deadline
- March 15, 2019
- District of Colorado
The complaint charges Maxar and certain of its officers with violations of the Securities Exchange Act of 1934. Maxar is a leading global provider of advanced space technology solutions for commercial and government markets, including satellites, Earth imagery, geospatial data, and analytics.
Among the Company’s assets is the WorldView-4 satellite (“WorldView-4”). Launched in November 2016, WorldView-4 generated revenues of approximately $85 million in fiscal year 2018. The satellite had a net book value of approximately $155 million, including related assets, as of December 31, 2018. WorldView-4 is equipped with control moment gyros (“CMGs”), which are attitude control devices generally used in spacecraft attitude control systems.
The complaint alleges that, throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business, operations and financial condition. Specifically, defendants failed to disclose that Maxar had improperly inflated the value of its intangible assets, among other accounting improprieties, and Maxar’s highly valued WorldView-4 was equipped with CMGs that were faulty and/or ill-suited for their intended purpose. As a result of this information being withheld from the market, Maxar securities traded at artificially inflated prices during the Class Period, with Maxar stock reaching prices of more than $50 per share.
On August 7, 2018, Spruce Point Capital Management (“Spruce Point”) published a research report regarding Maxar, alleging, 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 had used its 2017 acquisition of DigitalGlobe, Inc. “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.” Following publication of the Spruce Point report, Maxar’s stock price fell $5.97 per share, or more than 13.44%, to close at $38.44 on August 7, 2018.
Then, on January 7, 2019, Maxar disclosed that WorldView-4 had experienced a failure in its CMGs, preventing the satellite from collecting imagery due to the loss of an axis of stability. It was further disclosed that WorldView-4 would likely not be recoverable and would no longer produce usable imagery. Following this announcement, the Company’s stock price fell $5.69 per share, or more than 48%, over the following two trading sessions, to close at $6.03 per share on January 8, 2019.