What's up Food supplier. Agolity announces it may fight allegations it overcharged US.
Investors pleased with Agility's plea
DUBAI // After assuming the company was throwing in the towel, investors cheered yesterday when Agility announced it may fight allegations that it overcharged the US government on contracts worth billions of dollars. Agility, the largest logistics and storage company in the Middle East and the top food supplier to the US military, soared to a three-week high on the Kuwait stock exchange after a US judge entered a not guilty plea on the company's behalf.
The company had refused to enter a plea, arguing that it was not properly served with the indictment. Agility was indicted in November on multiple charges of conspiracy and fraud for allegedly overcharging the US government about US$8.5 billion (Dh31.2bn) to feed troops in Iraq, Kuwait and Jordan. Agility closed up 6.7 per cent at 640 Kuwaiti fils yesterday, with more than 18 million shares changing hands.
"Investors are speculating they will be able to settle the case out of court," said Ali Khan, a director at Arqaam Capital in Dubai. "The shares have over-corrected since the news [of the indictment]. It's down about 50 per cent since the indictment and investors are now catching up with buying." The company, which is cross-listed on the Dubai Financial Market (DFM), said in a statement to the Kuwaiti bourse in December that it was in negotiations with the US department of justice over the dispute. Its shares on the DFM closed unchanged yesterday.
"The court agreed to assign the case for purposes of setting a briefing schedule and entered a plea of not guilty on the company's behalf to allow the case to move forward," Agility said in a statement to Zawya Dow Jones after Monday's hearing. The company has been temporarily banned from doing further business with the US government and there was speculation the ban could become permanent. Some analysts said the lawsuit was needlessly dragging down the stock.
"Agility has moved on the US filing news today, but it is attractively priced at the moment," said Digvijay Tanwar, a senior financial analyst at Global Investment House in Kuwait. @Email:firstname.lastname@example.org