Liberty Tax Inc. shares climbed as much as 28 percent, the most in more than six years, after founder John Hewitt agreed to sever ties with the company and sell all of his shares following a sex scandal that had already cost him his job as chief executive officer.
Hewitt will dispose of his stake “promptly” and resign as chairman, the Virginia Beach, Virginia-based firm said Tuesday in a regulatory filing. An amended credit agreement with SunTrust Banks Inc. included the condition that he resign and relinquish majority control by the end of this month.
Shares of Liberty Tax surged 25 percent to $10.50 at 1:38 p.m. in New York and earlier climbed as high as $10.80. The Virginian-Pilot reported on Hewitt’s planned departure earlier Tuesday.
His resignation will cap a two-decade run at Liberty Tax that unraveled last year after the board found Hewitt had sex in his office and hired relatives of female employees with whom he had romantic relationships. He was ousted as CEO in September, while remaining chairman and in control of the board through his Class B shares.
His earlier refusal to sell led to so much turmoil that Liberty Tax delayed several earnings reports, and its auditor resigned. The tax preparer has yet to file an annual report for the fiscal year ended April 30. In a July 18 letter, Nasdaq warned Liberty Tax that it was in violation of the stock exchange’s listing requirements.
Liberty Tax Chief Financial Officer Michael Piper didn’t immediately reply to a phone message seeking comment
