Diamond to miss report deadlines; faces delisting

by Eric Schroeder
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SAN FRANCISCO — Diamond Foods, Inc. said it will not meet the previously disclosed June 11 Nasdaq deadline to file its quarterly reports on Form 10-Q for the periods ended Oct. 31, 2011, Jan. 31, 2012, and April 30, 2012. As a result, Diamond said it expects to receive a delisting determination letter from the Nasdaq Listing Qualifications Department for failure to comply with Nasdaq Rule 5250(c)(1). Diamond intends to request a Nasdaq hearing to appeal any delisting determination and to report on its plan for compliance with Nasdaq’s listing rules.

Diamond also said it will seek an extension for holding its annual meeting of stockholders, which it currently does not expect to convene before July 31, 2012. The company plans to hold its annual meeting as soon as practicable following the filing of its restated financial statements and the delayed Forms 10-Q.

“Diamond and its auditors have devoted significant resources and are working diligently to complete the restatement for fiscal years 2011 and 2010 and file our delayed fiscal year 2012 quarterly reports as soon as possible,” said Mike Murphy, interim chief financial officer. “We look forward to discussing the progress we have made with Nasdaq and to getting Diamond current in its filings soon.”

In late May, Diamond Foods secured a $225 million investment from Oaktree Capital Management, a private equity investor, as part of a market recapitalization. The new financing arrangement came after a turbulent several months at Diamond during which the company acknowledged inadequate internal accounting controls and said certain grower payments for the 2011 and 2010 crops were not accounted for in the correct periods. The investigation and findings led to the ouster of Michael J. Mendes and Steven M. Neil, the company’s c.e.o. and chief financial officer, respectively. It also prompted Diamond to abandon its $1.5 billion acquisition of the Pringles snack business from Procter & Gamble Co.

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