Tesco PLC (LON:TSCO) has taken a step closer to drawing a line under its 2014 accounting scandal after it opened a multi-million pound compensation scheme for investors who bought shares shortly before news of the saga broke.
Back in September 2014, Tesco admitted it had overstated first-half profits by £250mln for that year and a subsequent investigation found that the supermarket giant had repeatedly withheld money from suppliers to artificially boost its sales figures.
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10,000 investors owed compensation
Thousands of investors sued the company in the following weeks and months, claiming that they had lost millions after buying shares based on false and misleading accounts.
The compensation scheme – which regulators estimate will cost the UK’s largest supermarket chain around £85mln – will pay out to around 10,000 share and bondholders who bought into Tesco between 29 August and 19 September 2014.
Compensation will be 24.5p per share plus interest, which stands at 1.25% per annum for institutions and 4% for retail investors.
Tesco said in a statement that it has appointed KPMG to administer the scheme, with the Financial Conduct Authority overseeing it.
In March this year, the Serious Fraud Office slapped the supermarket with a hefty £129mln fine in a deal that meant it couldn’t be prosecuted.
‘Final chapter of saga’
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“Compensating investors is the final chapter in the accounting saga and Tesco is keen to put this episode behind them, especially as CEO Dave Lewis has got the business moving in the right direction despite challenging market conditions,” said Hargreaves Lansdown’s Danny Cox.
“Stronger trading, particularly in the UK, means that after a two-plus year absence, Tesco is planning to restore its dividend this year.
“Investors who have not yet made a compensation claim are now on the clock to submit their claims or receive nothing.”
Tesco investors were clearly happy to see the back of this sorry scandal, with shares up 1.9% to 187.8p.