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Treasury Wine Estates (ASX: TWE) has agreed to pay $65 million to settle two class actions that were launched against the company by shareholders who booked investment losses from an earnings downgrade in 2020.
While Treasure Wines says the payment is no admission of liability, the company reached the settlement to bring the four-year battle to a close.
“The settlement was a commercial decision made in the best interests of shareholders to enable TWE to remain focused on executing against its strategy,” says the company in a statement to the ASX.
Separate class actions against Treasury Wine were brought by legal firms Slater and Gordon and Maurice Blackburn in late 2020, with the legal bids later merged into one.
The class actions had alleged that Treasury Wine Estates had engaged in engaged in “misleading or deceptive conduct” and breached its continuous disclosure obligations based on an earnings guidance originally provided to the market in 2018 and 2019.
Treasury Wine downgraded its earnings guidance for FY20 on 28 January 2020 from EBITS growth of between 15 and 20 per cent to between 5 and 10 per cent.
The underperformance of its US operations, led by “unexpected leadership changes” in the division, were expected to hit the company’s results for the year.
At the time the company suffered a raft of exits but the earnings downgrade specifically noted the leadership issue which related to Angus McPherson being unable to move to the US after "unforeseen personal circumstances" prevented him from doing so.
Slater and Gordon says that a seven-week trial was due to start today in Victoria’s Supreme Court to hear the class action claim.
“We are pleased to have been able to reach this outcome for group members on the eve of a trial listed for seven weeks, following hard fought litigation with Treasury,” says Slater and Gordon’s principal class actions lawyer Mitchell Coidan.
“The outcome means that group members who sustained losses as a result of Treasury’s allegedly contravening conduct, will receive compensation in the short term.
“We are glad to have achieved this result for affected group members, without the need for a protracted court process.”
Treasury says the full amount of the settlement will be met by “available insurance proceeds”.
“The settlement is subject to the finalisation and execution of a deed of settlement,” says the company.
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