Australia's Treasury Wine slapped with disclosure class action
SYDNEY, July 2
SYDNEY, July 2 (Reuters) - A law firm on Wednesday said it had filed a Federal Court class action against Australia's Treasury Wine Estates Ltd claiming it misled shareholders about its U.S. business before destroying millions of bottles of wine last year.
The world's No. 2 winemaker, which has the Penfolds and Beringer labels, rejected the allegations and vowed to "vigorously defend" itself against the much-anticipated suit.
The suit is yet another headache for a company that has been slashing earnings forecasts and changing leadership because of oversupply in its troubled U.S. unit. Spun off from Fosters Group Ltd in 2011. Treasury has rebuffed a series of takeover offers because of its lagging share price.
Law firm Maurice Blackburn said it filed the class action over what it said was late disclosure of a A$190 million ($179.76 million) writedown in 2013.
It said the writedown included a $33 million provision to pour "six million bottles of out-of-date wine down the drain".
Treasury "knew or should have known" by Aug. 17, 2012, that large writedowns were inevitable and should have informed the market earlier, Maurice Blackburn Principal Rebecca Gilsenan said in a statement to the Australian Securities Exchange.
The market "wasn't informed until July 2013 so shareholders unfairly paid an inflated price for the stock in the meantime", she added.
The class action is being funded by litigation financier Bentham IMF Ltd. In the statement, Bentham Investment Manager Tania Sulan said Treasury incorrectly told the market on multiple occasions throughout 2013-2014 that its earnings would grow as it "adequately managed its U.S. distributors' inventory levels".
Treasury said it "strongly denies any and all allegations against it and will vigorously defend the legal proceeding".
It noted that the applicant on the claim, Brian Jones, bought 1,000 Treasury shares at an average A$4.76 each on Aug. 17, 2012, or about 2.5 percent less than they were trading at on Wednesday.
The shares were down 1 percent at A$4.88 at 0348 GMT, compared with a 1.2 percent rise in the benchmark S&P/ASX 200 index.
($1 = 1.0570 Australian Dollars) (Reporting by Byron Kaye; Editing by Stephen Coates)