Woolworths faces possible class action from shareholders
A group of Woolworths shareholders may soon launch class action against the supermarket and retail giant for its 13.7 per cent share dive on the back of its 2015 profit downgrade.
The class action is being organised by Maurice Blackburn Lawyers, along with global litigation funder IMF Bentham. An online registration portal has been opened for shareholders to sign up to claim a share of what Maurice Blackburn Lawyers says could be more than $100 million in compensation.
Class Action Principal from Maurice Blackburn, Andrew Watson, said that while investigations into the case was ongoing, it was clear Woolworths had known it was significantly behind on its profit projections as early as October 2014 but continued to maintain its profit guidance until the publication of its half year accounts in February 2015.
“When the profit guidance was revised down, Woolworths shares dropped to $4.66 or 13.7 per cent of their value in two days,” Watson said.
“When corporations don’t abide by the laws requiring they make timely and accurate market disclosures, these aren’t mere technical breaches – it causes loss to shareholders, undermines the integrity of the market and distorts the efficient allocation of capital that could go to more deserving companies,” Watson stated.
Senior Investment Manager at IMF Bentham, Wayne Attrill, said that like all shareholder class actions that attracted litigation funding, any possible class action against Woolworths was a market-based response to a market-based issue and would only proceed if enough shareholders supported seeking redress.
“This is a chance for investors who believe they were deprived of information on the true state of affairs of the company standing up and being able to access a meaningful redress mechanism whilst sending a strong message to the company that such breaches aren’t acceptable,” Attrill said.
Woolworths’ response
In response to the potential class action, Woolworths said that it has not been served with any proceedings and that it considers that it has at all times complied with its continuous disclosure obligations.
“If proceedings are commenced they will be defended on this basis,” Woolworths said.
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