TORONTO, Sept 30 (Reuters) - Shares in auto parts manufacturer Martinrea International Inc extended their slump on Monday after analysts downgraded the stock following a claim filed last week that alleged that some company officials and directors breached their fiduciary duties.
Martinrea, in a statement, said it had received a copy of the claim and was preparing its defense. The company did not immediately respond to requests for comment.
According to a statement released on Thursday, Natale Rea, Martinrea vice chairman until June 2012, and Rea Holdings Inc have filed a claim in the Ontario Superior Court of Justice.
“The plaintiffs allege, among other things, that the defendant directors and senior officers of Martinrea breached their fiduciary duties to Martinrea in relation to a series of related party transactions involving certain suppliers and customers of Martinrea and certain payments allegedly made in connection with such transactions,” the statement said.
It said Rea is considering actions, including calling for a special shareholders meeting to remove the board and elect new members. Rea’s representatives could not be reached for comment.
Martinrea shares slumped as much as 8.8 percent on Monday after sinking 10.3 percent on Friday. By early afternoon, the shares were 3.3 percent lower at C$10.60.
BMO and RBC cut Martinrea to perform from outperform, while Canaccord Genuity cut the stock to hold from buy. Canaccord and BMO both trimmed their target price to C$11.50 from C$14.75 and C$14.50 respectively.
“Mr. Rea has made serious allegations against certain senior managers and directors of Martinrea,” BMO’s Peter Sklar said in a note to clients.
“In the interim, we believe there may be a considerable period of time until these allegations are resolved, as well potential damages could be material.” (Reporting by Solarina Ho; Editing by Janet Guttsman and Dan Grebler)