Angry shareholders take class action

23 Feb, 2006 01:03 PM
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AGGRIEVED AWB shareholders are determined to pursue class action for loss of value of their shares, which have slumped from $6.40 on January 12 before the Cole inquiry to around $4.

They claim they have been lied to about the value of their shares and were not made aware of all the relevant information that might have affected the share price.

As reported in last week's Farm Weekly, investigating the case is industrial law specialist Maurice Blackman Cashman, which handled Australia's first shareholder class action in 2003, gaining $97 million for GIO stakeholders.

Company principal Ben Slade said there had been a groundswell of interest in a class action from disgruntled AWB shareholders.

"We have got significant interest from shareholders and custodians who have suffered substantial losses," he said.

The case will centre on the assertion that AWB did not divulge information that would have an influence on its share price.

"The law is that a company has an obligation to disclose information that could influence the price," Mr Slade said.

Despite publicity about AWB's unusual A and B-class share system, the Australian Stock Exchange (ASX) said the structure was not responsible for its failure to release the information.

It said AWB was under the same disclosure obligations as other companies listed on the ASX.

Mr Slade said most interest in the class action had come from B-class, or non-grower, shareholders and their custodians.

He said he had been contacted by a number of grower shareholders, but they were content to monitor the inquiry.

It is not known why growers are not joining the class action, but most insiders agree there will be little farmer participation in a class action until the inquiry findings are handed down and there is certainty regarding future wheat marketing arrangements.

Mr Slade said the class action was a virtual fair accompli and a strong claim.

He said shareholder reaction to inquiry findings were varied.

"Emotions ranged from shock to severe disappointment that their company could have behaved so badly and also so appallingly within the context of the international market," he said.

"AWB has acted in the pursuit of profit and, like any gambler, this pursuit of profit comes at an enormous cost to them and all around them ‹ in this case, the whole Australian wheat industry."

Mr Slade was pessimistic about the long-term market implications of AWB's indiscretions.

"I think the industry will probably suffer for a decade or so before this is forgotten," he said.

His forecast was in contrast to the more positive picture pained by others in the grains industry who have suggested Australian wheat will bounce back quickly on the back of market factors, such as a potential poor season in key production areas including Ukraine and the US.

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