Supreme Industries, Inc.
(NYSE MKT: STS)
, a leading manufacturer of specialized commercial vehicles including truck bodies, shuttle buses and armored vehicles, today announced that its it has reached a settlement regarding the previously disclosed litigation with King County, Washington.
On February 22, 2012, King County, Washington filed a complaint against a subsidiary of Supreme Industries, Inc. (the “Company”) seeking to revoke the county’s acceptance of a fleet of thirty five buses, which had been manufactured by the Company’s subsidiary and delivered to King County beginning in 2009, and alleging breach of contract and breach of implied warranties. As of February 28, 2013, King County claimed its damages were then $10,594,113. The county subsequently moved to add a consumer protection act claim which would permit an award of attorney’s fees, in addition to its damages, if successful.
On June 14, 2013, the Company’s subsidiary and King County entered into a Settlement and Release Agreement under the terms of which the lawsuit will be dismissed and mutual releases granted in exchange for payment of the sum of $4,737,500 to the county within ninety days of the date of the agreement. Through separate agreements, the Company’s subsidiary settled third-party claims against certain third-party subcontractors who will contribute to the Company’s subsidiary $520,000 of the settlement funds, with the Company’s subsidiary responsible for the balance which is intended to be paid by utilization of approximately 12% of the Company’s $35,000,000 credit facility. The settlement, net of third party funds, is $4,217,500 or $2,867,900 net of tax. The Company will take possession of the fleet of buses from the county on or before July 9, 2013. The Company will look at ways to resell or repurpose the buses in a way that maximizes their value.
Mark D. Weber, President and Chief Executive Officer, commented, “In light of the risks and costs inherent in continuing this suit, the Company determined that it was in its interest to bring this matter to resolution. Supreme remains focused on providing products and services that meet customer expectations for the truck, armored vehicle, shuttle bus, mid-size bus, and trolley markets.”