Treasury Wines Estate has reached a $65 million settlement with shareholders who launched a class action in April 2020, after the company downgraded its forecast earnings, which wiped $3 billion from its market capitalisation.
The settlement came on the day a seven-week trial on the matter was set to begin in the Victorian Supreme Court. The settlement is subject to court approval and Treasury has made no admission of liability.
TWE said that in reaching the settlement it was making no admission of liability.
“The settlement was a commercial decision made in the best interests of shareholders to enable TWE to remain focused on executing against its strategy,” it said.
In January 2020, TWE revised its FY20 earnings before interest and taxes (EBIT) forecast from 15-20 per cent to 5-10 per cent, following its US business reporting a 17 per cent decline in earnings for 1H20.
CEO at the time, Michael Clarke, said, “The early announcement of our first half results, which remain subject to audit review, reflects the fact that we slightly missed our 1H20 EBITS versus our own expectations and based on our revised full year forecast our growth rate in F20 will be lower than previously guided.”
Slater and Gordon and Maurice Blackburn filed class actions against before representing shareholders jointly.
The class action alleged Treasury engaged in misleading or deceptive conduct and breached its continuous disclosure obligations based on the earnings guidance it provided the market in 2018 and 2019.
TWE said the agreed amount will be paid by its available insurance proceeds and was subject to the finalisation and execution of a deed of settlement.
“While TWE currently expects that this requirement will be satisfied, this is not certain to occur. The settlement will also be conditional upon approval by the Supreme Court of Victoria,” TWE told the ASX.
