Leighton facing write-downs class action
A class action lawsuit relating to more than $1 billion in profit write-downs will be added to the list of shareholder concerns when the Leighton Holdings board faces the company's annual meeting on Monday.
Law firm Maurice Blackburn served a legal letter notifying the construction group of its proposal to begin a class action, which has been about 18 months in the making.
"We are ready to file a class action against Leighton and confirm that we have sent a draft statement of claim to Leighton," said Rebecca Gilsenan, principal class action lawyer at Maurice Blackburn.
The claim will allege Leighton misled the market about its true financial position from at least August 16, 2010, until the disclosure on April 11, 2011.
As late as February 2011, Leighton had forecast a full-year net profit of $480 million, before stunning investors with a projected $427 million loss just two weeks later, driven by more than $1.1 billion in write-downs relating to cost blowouts on the Victorian desalination plant and Brisbane Airport Link projects.
"The 11 April 2011 announcement signalled the worst annual loss in the company's history," Ms Gilsenan said. "The participants in the claim will allege that Leighton misled the market about its true financial position."
A statement from Leighton to the stock exchange on Friday denied there was any "proper basis" for a claim and that the company would "vigorously defend" a class action.
The Australian Securities and Investments Commission launched a separate investigation following the controversial write-downs and fined the company $300,000 in March last year and told Leighton to improve its corporate governance.
But corporate governance remains a chief concern among Leighton investors, exacerbated by the mass show of dissent from then chairman Stephen Johns and four independent directors.
Mr Johns resigned as chairman, along with directors Wayne Osborn and Ian Macfarlane in protest over what they saw as interference in the board's independent operation by Leighton's German majority shareholder Hochtief (which in turn had been taken over by Spanish construction giant Grupo ACS).
Bob Humphris, who is now chairman, and Paula Dwyer, who is chairing a committee to find three new directors, also expressed concerns but decided to stay with the company.