Agility Gains Most in 2 Months on U.S. Legal Claim: Kuwait Mover
Agility (AGLTY) rose the most in two months as the Kuwaiti company charged with defrauding the U.S. government said it filed a claim seeking about $225 million from the Department of Defense for breaching contract terms.
The shares surged 4.9 percent, the most since Feb. 22, to 425 fils at the 12:30 p.m. close in Kuwait City. The stock was the most traded by value on Kuwait’s SE Price Index (KWSEIDX), which was little changed at 6,327.60.
The Armed Services Board of Contract Appeals in Falls Church, Virginia, received the appeal on April 16, said David Houpe, the board’s chief counsel. The supplier alleges the Pentagon’s Defense Logistics Agency and the Department of Justice “conspired and acted in concert to intentionally deprive” the company of its rights under the contract to deliver food to troops in Iraq and Kuwait.
“There will be two views: that Agility is justly retaliating and it will gain something from this move, or that the counter-claim effectively crushes any recent hopes that an amicable settlement to the ongoing case may be achieved and legal battles will go on until we all retire,” said Julian Bruce, the Dubai-based director of institutional sales trading at EFG-Hermes Holding SAE.
The storage and logistics provider, indicted in the U.S. in November 2009, is accused of overcharging the Pentagon for supplying food for troops in Kuwait and Iraq. The shares slumped 8.8 percent in 2010 and 28 percent last year amid the charges. The stock is up 13 percent so far this year, compared with a gain of 8.8 percent in Kuwait’s benchmark index.
The Defense Logistics Agency was obligated under the contract to provide objective evaluations that might have led to higher payments, Agility said in a statement yesterday. Instead, it said the Justice Department interfered and pressured the military agency to downgrade the supplier’s performance. Officials at the Defense Logistics Agency and the Department of Justice didn’t immediately comment.
The $225 million sought by Agility includes $159 million in performance-based distribution fees plus interest, according to the company’s statement.
In a separate case, Agility in February asked a federal judge in Atlanta to throw out charges that it defrauded the U.S. government on a multibillion-dollar contract to feed troops overseas, saying prosecutors have no proof and on the basis of a “troubling pattern of misconduct” by the prosecution.
Two analysts recommend investors buy Agility shares while one says hold, according to data compiled by Bloomberg.
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