This article is from the Australian Property Journal archive
DISGRUNTLED Centro shareholders will finally have their day in court, four years after the class action was launched.
The trial begins in the Federal Court in Melbourne at 10:15am in courtroom 6K, presided over by Justice Michelle Gordon.
In 2008, Maurice Blackburn issued Federal Court proceedings on behalf of shareholders, alleging that Centro Properties Group and its listed subsidiary Centro Retail Group engaged in misleading and deceptive conduct by not disclosing the full extent of their known debts.
The revelations of Centro’s debt debacle on 18 December 2007 saw Centro’s share prices plunge, falling 76.1% or $4.34 to close at a basement price of $1.36.
The freefall wiped billions of Centro’s market capitalisation, which sank from $4.82 billion to $1.15 billion in just one day.
And the newly minted Centro Retail Trust, which is now trading as Centro Retail Australia, also nosedived, falling 40.4% to 57.5 cents — wiping the market cap from $3.36 billion to $1.94 billion.
Maurice Blackburn’s principal Martin Hyde said the group members in the class actions comprise a broad range of investors who are seeking damages in excess of $200 million.
“Our clients range from individuals, some of whom lost their life savings on Centro, through to the largest financial institutions in Australia,” Hyde said.
“The actions of Centro in not disclosing known debts of around $5.7 billion to shareholders, is reflective of the cavalier corporate conduct that led to the global financial crisis.
“This is a gross failure of corporate governance and proper accountancy practices that has led to thousands of Australians suffering very significant losses,” he added.
As part of the “aggregation” merger deal signed with lenders last year, Centro allocated some funds from the $100 million payout towards the class action.
However the Federal Court recently joined the newly formed Centro Retail Australia to the class action.
CRF is now preparing a defense against the class action.
Maurice Blackburn is also taking action against Centro’s former auditors PricewaterhouseCoopers for failing to detect errors regarding Centro’s debts in its financial accounts.
PropertyReview
