Treasury Wine Estates faces lawsuit

By Erin Smith

Published: 07 November, 2013

The hangover continues for Treasury Wine Estates (TWE) following its AUD $160 million write down earlier in the year; TWE now faces a lawsuit by Melbourne City Investments and second potential class action lawsuit funded by IMF Ltd and Maurice Blackburn lawyers who, to date, have only publicised their potential intent to undertake a shareholder class-action case against TWE but who have not, at this stage, commenced any legal proceedings.

The suit that has commenced is led by Melbourne City Investments and litigation funder IMF and Maurice Blackburn lawyers publicised their potential intent to undertake a shareholder class-action case against TWE last week.

Melbourne City investments, have accused Treasury Wines of misleading the market and is in breach of disclosure obligations as it related to financial impact of excessive over-stock being held by US distributors, including the eventual destruction of six million bottles of out-of-date wine worth $33 million.

The allegations against TWE that may be brought by IMF Ltd and Maurice Blackburn lawyers alleges TWE stated the company, "failed to disclose material information concerning the on going performance of its US operations" and "made misleading statements in relation to its expected financial performance for the financial years ending 30 June 2013 and 30 June 2014, predominantly arising from issues encountered by its US operations," according to IMF's website.

TWE has issued a statement in which it said it "strongly denies any and all allegations of wrongdoing."

When TWE announced the write down on July 15, the stock which had traded on a high in May of AUD $6.43/share, dropped to AUD $5.11/share in a single day of trading on the Australian stock exchange.

Subsequently, on September 23, TWE announced the ousting of the company's chief executive officer (CEO) David Dearie.

Printer friendly version