Treasury Wine Estates faces class action

ASX-listed winemaker Treasury Wine Estates (TWE) could face a class action lawsuit over the financial performance of its US operations.

IMF today announced that it would fund shareholder claims related to alleged misleading and deceptive conduct, and alleged breaches of TWE's continuous disclosure obligations.

In July, TWE announced a $154.3 million provision that included the $34 million cost of destroying up to 600,000 cases of old and unsold wine in the US.

TWE chairman Paul Rayner told shareholders last week that this could have been avoided if the company had had better reporting systems in place.

He said while its inventory management systems had allowed it to assess its own stock levels, the company was unable to see how much of its wine was sitting on the shelves of distributors.

According to IMF, a key issue of the lawsuit relates to alleged inadequate disclosure of issues associated with excessive inventory held by Treasury’s US distributors.

IMF said investors who acquired Treasury Wines shares between 17 August 2012 and 14 July 2013 inclusive may be eligible to participate in the class action.

In its own statement, TWE said it strongly denied any allegations of wrongdoing and would defend any class action proceedings vigorously.