Slater and Gordon has issued proceedings on behalf of shareholders against Treasury Wine Estates following its profit downgrade in January, which wiped $3 billion from its market capitalisation.
The legal firm is bringing the class action on behalf of shareholders who purchased shares between 14 February 2019 and 28 January 2020.
Senior Associate Kaitlin Ferris told Food & Drink Business: “As a result of our investigation following Treasury’s profit downgrade on 28 January 2020, we concluded that there was a strong basis to allege that the company provided misleading guidance, and was obliged to correct the market’s understanding of its financial position at a much earlier time.
On 28 January, the company announced its Americas region had recorded a massive 17 per cent decline in earnings before interest, tax and the SGARA agricultural accounting standard for 1H20.
TWE said changes in its Americas leadership, as well as wine market dynamics with suppliers aiming to move surplus wine across the market for a lower price, and not being able to recover or offset higher US Luxury COGS and higher Australian Commercial COGS, impacted on its 1H20 results (Food & Drink Business 29/01/2020).
The profit downgrade wiped $3 billion from the company’s market capitalisation. TWE shares were $17.70 on 24 January but are currently trading around $10.
The statement of claim includes allegations of contraventions of the Corporations Act in relation to continuous disclosure and the Corporations Act and ASIC Act in relation to misleading or deceptive conduct.
Ferris said: “The claim relates to conduct which pre-dates any Treasury announcement about the impact of Coronavirus (COVID-19) on its business and operations.”
In a statement to the ASX, Treasury Wine Estates acknowledged it had been served with a group proceeding filed in the Supreme Court of Victoria and said it “strongly denies” any allegations of wrongdoing and will vigorously defend the proceeding.
Ferris said that the claim had been issued on an open class basis, and therefore covers all shareholders who purchased shares in the time period.