Treasury Wine Estates facing second class action

Treasury Wine Estates is now facing two class actions alleging it failed to tell shareholders of troubles in its Americas division.

A California vineyard.

Treasury Wine Estates, the maker of Penfolds, Wolf Blass and Lindemans, has been hit with a second shareholder class action resulting from its recent profit downgrades and tumbling share price.

The case launched by law firm Maurice Blackburn follows a separate case lodged by Slater & Gordon in April.

Both class actions allege Treasury Wine did not fully disclose its financial position to shareholders, especially as it related to issues plaguing its crucial Americas division.

Maurice Blackburn said on Friday it had filed a class action in the Supreme Court of Victoria, on behalf of its client Steven Napier, accusing Treasury of engaging in misleading and deceptive conduct and breaching its continuous disclosure obligations in the period from June 30, 2018 to January 28, 2020.

The class action centres on Treasury’s declining performance in its Americas wine business since at least mid 2018, Maurice Blackburn said. It follows Treasury Wine’s ASX announcement on January 28, 2020 in which it downgraded its fiscal 2020 EBITS growth forecast from an anticipated rate of between 15 per cent and 20 per cent to down to 5 per cent to 10 per cent.

“There was a significant market reaction to this announcement. Over the following two days, Treasury’s share price dropped by approximately 20 per cent in total, with a drop of 25 per cent on 29 January 2020 alone,’’ the law firm said.

Following initial investigations, the Maurice Blackburn case has now been extended. For those shareholders looking to claim, it commences at June 30, 2018, not February 14, 2019 as previously indicated, and concludes on January 28, 2020.

Maurice Blackburn is following a similar argument put by Slater & Gordon, which said the winemaker ought to have known that an oversupply of grapes from a record harvest in California, combined with falling sales volumes in the US and a departure of its key executives, would dent its ability to hit stated profit targets.

The Slater & Gordon case was brought on behalf of shareholders who acquired an interest in Treasury between February 14, 2019 and January 28, 2020.

Treasury Wine said when the Slater & Gordon action was launched that it strongly denied all allegations of wrongdoing and intended to vigorously defend the proceeding.

Shares in Treasury Wine closed down 6.9 per cent on Friday at $9.45.