Construction giant Leighton Holdings will vigorously defend claims in a proposed class action that it did not properly inform shareholders about its massive slump in financial performance.
Law firm Maurice Blackburn is seeking interest from Leighton shareholders wanting to recover losses suffered as a result of significant falls in the company’s share price.
The firm alleges Leighton breached continuous disclosure obligations, as set out in the Corporations Act, by not earlier informing the market of losses from its work on a Victorian desalination plant, Brisbane’s Airport Link motorway and its part-owned Middle East operations.
“We will allege that by 2 November 2010, and certainly by 14 February 2011, Leighton should have told the market of the need for these massive writedowns,” Maurice Blackburn principal Andrew Watson said.
Leighton first informed investors of those issues on April 11 when it downgraded its forecast of a $480 million profit for the 2010/11 financial year to a $427 million loss.
The announcement followed a review of its operations, which led to a $282 million drop in profit contribution from the Wonthaggi desalination project, a before-tax loss of $430 million on the Brisbane Airport Link, and a $320 million writedown on the value of its stake in the Habtoor Leighton Group.
The law firm says shareholders who bought Leighton stocks between November 2 and April 11 may be able to recover their losses if they joined its proposed class action.
Leighton shares lost 20 per cent of their value in that period, dropping by $7.20 to $28.30.
The shares have continued to fall since, and closed at $20.55 on Thursday.
In a statement, Leighton on Thursday said it has not yet been served with any legal proceedings.
“Leighton will vigorously defend claims of the nature described in those statements,” the company said in reference to Maurice Blackburn’s allegations.
Leighton was seeking approval for design changes on the Brisbane Airport Link because of expected delays as early as April 2009, Maurice Blackburn alleged.
Leighton also advised the market that construction of the desalination plant was on time at least five times between November 2010 and March 2011, the legal firm said.
Leighton was queried about the timing of its profit downgrade by the Australian Securities Exchange (ASX) in April, to which it said the market was informed as soon as the company was aware of the expected losses.
“At all times, the company has been mindful of its continuous disclosure obligations,” Leighton secretary Ashley Moir said on April 18.
The allegations come days after a massive upheaval at Leighton, in which its board terminated the contract of chief executive David Stewart on the same day chairman David Mortimer resigned.
Mr Stewart replaced long-time chief executive Wal King in January.
The head of Leighton Asia, Hamish Tyrwhitt, has since been appointed CEO.
