Shareholders may sue Treasury Wine over U.S. inventory impairment
SYDNEY (Reuters) - Australia's Treasury Wine Estates Ltd (TWE.AX: Quote) is facing a potential class action lawsuit from shareholders over the ditching of aged U.S. inventory after litigation firm IMF Australia Ltd (IMF.AX: Quote) proposed funding the proceedings.
The litigation financing firm and Maurice Blackburn, a law firm, said Treasury Wine should have disclosed the impairment much earlier and had misled the market.
Treasury Wine, the maker of Penfolds, Beringer and Wolf Blass wines, said in July it would destroy some of its aged U.S. inventory. That resulted in a pre-tax material item charge of $154.3 million for 2013, and the company said it would impact fiscal 2014 operating earnings by up to $30 million.
"Evidence suggests that Treasury Wines knew, or should have known by 17 August 2012 that large write downs were inevitable," said Ben Slade, Maurice Blackburn NSW Managing Principal.
Treasury Wine said no proceedings have been served against it as of Monday.
"TWE strongly denies any allegations of wrong doing and will defend any class action proceedings vigorously," said Treasury Wine spokesman Roger Sharp.
Sydney-based IMF has been credited for pioneering the litigation financing industry in Australia, where a favorable regulatory environment and a number of high-claim class actions have proved highly profitable in recent years.
Treasury shares were trading 1.3 percent higher on Monday morning. They have lost about 13 percent since July.
IMF shares edged down 0.3 percent.
(Reporting by Maggie Lu Yueyang; Editing by Edwina Gibbs)
© Thomson Reuters 2017 All rights reserved.