Treasury Wine Estates settles shareholder class action for $49m

Treasury Wine Estates has settled a shareholder class action alleging disclosure obligation breaches for $49m.

Treasury Wine Estates chief executive Michael Clarke at his office in Soutbank, Melbourne. (David Geraghty/The Australian)

Wine supplier Treasury Wine Estates has settled a shareholder class action brought against it for allegedly engaging in misleading and deceptive conduct, for $49 million.

In July 2014, Brian Jones and other TWE shareholders, represented by law firm Maurice Blackburn, launched Federal Court action against TWE for allegedly breaching disclosure obligations over writedowns incurred in 2013 to deal with excess, aged and deteriorating stock in the United States.

Treasury (TWE) said the $49m settlement includes interest and costs, and is fully insured so it won’t affect the company’s financial results. The settlement is without admission of liability.

“The agreement to settle was a commercial decision made in the best interests of TWE shareholders to enable the company to remain focused on executing against its strategy without the distraction and expense of the legal proceeding,” Treasury said in a statement on Monday.

TWE announced in July 2013 that it would destroy more than $35m of aged and excess stock in the US and offer major discounts after admitting it over-estimated the amount of wine needed to supply its US market. The company also took other measures to address the oversupply. TWE said at the time that all the measures taken would cost $160m in 2012/13 and result in lower shipments to the US in fiscal 2014. Disgruntled shareholders subsequently launched legal proceedings against TWE, claiming that TWE had breached its disclosure obligations.

A second class action commenced by Melbourne City Investments was permanently stayed as being an abuse of process.

At 1.07pm (AEST), Treasury shares were up 0.72 per cent at $14.06.

AAP