This article is from the Australian Property Journal archive
LAWYERS Maurice Blackburn have filed an open shareholder class action against property giant Lendlease.
Maurice Blackburn first flagged possibility of a class action earlier this month. The class action applies to shareholders who purchased LLC ordinary shares between 17 November 2017 and 8 November 2018.
Class actions principal lawyer Rebecca Gilsenan said the class action alleges Lendlease breached the Corporations Act by failing to properly inform the market of serious problems in its engineering and services business, which led to millions being wiped off its market capitalisation when the true extent of the problems was revealed.
In February Lendlease reported a 96% plunge in net profit, falling to $15.7 million in the HY19 compared to $425.6 million in HY18, due to the troubled engineering business.
The engineering & services business booked a loss of $473.7 million, on top of the $173.5 million loss in HY18. This comes after Lendlease said on 9 November 2018, it had identified ‘further underperformance’ in its engineering and services business, also announcing that it was reviewing its engineering and services business in light of that underperformance.
“The market reacted sharply to the announcements, with Lendlease’s share price dropping by more than 18% in a single day of trading on 9 November 2018.
“In its half year results presentation on 25 February 2019, LLC then announced that it considered the engineering and services nusiness was ‘no longer a required part of the group’s strategy,’ and it expected to incur restructuring costs of between $450 million and $550 million pre-tax as a result of that decision,”
“It defies belief that the company would not have had adequate awareness of such significant issues and changes to the business earlier than when it informed the market, ultimately distorting the share price for investors.
“The market had been led to think that Lendlease had its business under control and there would be no more disappointments. And then there was another massive provision. Unsurprisingly, the market reacted sharply,” Gilsenan said.
“Frankly, it is hard to believe that a company with the experience and sophistication of Lendlease wouldn’t have been aware earlier of such significant financial problems within its business. But if Lendlease didn’t know sooner, that is an even bigger problem as it would highlight to shareholders serious inadequacies of Lendlease’s internal systems to properly manage a complex business,” she continued.
Australian Property Journal
