Treasury Wine Estates has been accused of misleading shareholders by not warning them early enough of its plan to spend millions of dollars to destroy excess wine in the US.
Treasury chief executive David Dearie left the group in September
Australia-based litigation funder IMF and law firm Maurice Blackburn have said that they plan to file a class action lawsuit against Treasury Wine Estates on behalf of current and former shareholders.
They alleged that the Wolf Blass and Rosemount wine producer ‘misled’ investors over its ongoing problems in the US wine market. Treasury said that it strongly denies wrongdoing.
In July this year, Treasury announced that it would be forced to spend US$35m to destroy ‘old and aged’ wine in the US that it couldn’t sell.
In total, the firm wrote-down $160m of charges related to oversupply in the US in its last financial year, causing the group’s net profits to slide by 50% and culminating in the departure of the firm’s chief executive, David Deary.
‘Evidence suggests that Treasury Wines knew, or should have known, by 17 August 2012 that large write-downs were inevitable,’ said Simon Dluzniak, investment manager for IMF Australia.
According to IMF, shareholders of Treasury between that date and up to the end of 14 July 2013 could be eligible to join the lawsuit.
In a statement today (28 October), Treasury said that ‘no proceedings have been served against the company at this time. [Treasury] strongly denies any allegations of wrongdoing and will defend any class action proceedings vigorously.’
Written by Chris Mercer