Leighton to settle class action case
By Chris Sleight16 May 2014
Leighton has agreed to pay AU$ 65.6 million (US$ 59 million) plus costs to settle a class action lawsuit relating to a profit downgrade it issued in April 2011. The class comprises shareholders who purchased shares from 16 August 2010 to 11 April 2011.
The case came about following an announcement in April 2011, when Leighton downgraded its profit forecast for the 2011 financial year from a previously forecast AU$ 480 million (US$ 432 million) post-tax profit to a loss of AU$ 427 million (US$ 385 million). The losses stemmed from problems on two major Australian projects as well as an impairment charge at the company’s Middle East joint venture, Habtoor Leighton Group (HLG). The action was brought due to claims that the company knew about the issues earlier and should have disclosed them.
Commenting on the decision to settle the claim, Leighton CEO Marcelino Fernandez Verdes said, “Whilst we continue to deny the claim, the decision to settle the class action was a commercial one, taken in the interests of our shareholders. Resolving the matter permits management to focus on the operations of the business. It is important to note that the settlement is not an admission of any liability or a finding of any breach of law against Leighton or our executives.”
The settlement is conditional on court approval, and members of the class can opt-out if they wish before this decision is made.
Leighton said the settlement would not have any impact on its earnings or profit forecasts.