Listed development giant Lendlease is facing a second class action filed against it in the NSW Supreme Court.
The class action, filed by Phi Finney McDonald, alleges that Lendlease breached its disclosure obligations and misled the market regarding problems with its troubled engineering division.
The proceeding is being prepared on behalf of security holders who acquired shares between 17 October 2017 and 25 February 2019. The suit is seeking to compensate shareholders “who suffered loss and damage as a result of Lendlease’s conduct”.
Phi Finney McDonald alleges that Lendlease violated its continuous disclosure obligations by failing to inform the market of the ongoing issues within its engineering division prior to announcing a “catastrophic underperformance” and a $350 million provision of the business on November 9 last year.
The company’s share price fell 27 per cent in the three days following the announcement.
On February 25 of this year, Lendlease disclosed additional problems in its engineering division when releasing its half-year results. The share price fell a further 10 per cent over the following days.
“For more than a year, Lendlease had reassured investors that the storm was over, when in fact the worst was yet to come,” Phi Finney McDonald managing director Ben Phi said.
“Our clients allege that Lendlease failed to keep them properly informed of the problems, and their gravity, over a prolonged period.”
“The funding terms on offer are some of the most competitive we have seen in the Australian market and will ensure that the vast majority of recoveries are returned to group members.”
The class action has attracted significant levels of support from sophisticated institutional investors from Australia and abroad, including the prominent Teacher Retirement System of Texas which has $220 billion in assets under management
The class action is also supported by Therium Litigation Finance, an international litigation funder with extensive experience in Australia, also funding shareholder class actions against the Commonwealth Bank of Australia, GetSwift and Spotless Holdings.
“The litigation funding structure proposed by Phi Finney McDonald and Therium is innovative,” Texas TRS assistant general counsel Lane Arnold said.
“We are aware of the existing class action but chose to join the Phi Finney McDonald and Therium group instead because, in our estimation, the innovative funding structure offered will result in lower funding commissions and higher net recoveries, which ultimately benefit our members.”
The class action by Phi Finney McDonald follows the filing of a similar class action in April by Maurice Blackburn, which covers the same group over the same period.
In a statement released yesterday, Lendlease denied any liability and said it would “vigorously defend” the class action.