Shareholders launch multi-million dollar class action against MAH
A class action lawsuit has been launched against Macmahaon Holdings (ASX:MAH) by ACA Lawyers on behalf of shareholders alleging the troubled mining contractor failed to disclose market sensitive information in 2012 about the impact of delays in one of its biggest West Australian mining infrastructure projects.
It’s a timely warning for all in the mining sector to cross their Ts.
The claim alleges Macmahon Holdings breached its continuous disclosure obligations and engaged in misleading and deceptive conduct by failing to reveal the financial impact of delays on its Hope Downs 4 – Rail Earthworks and Bridge Construction project (HD4), part of Rio Tinto’s 333 expansion program in the Pilbara.
ACA Lawyers’ Principal, Steven Lewis, said retail and institutional shareholders are alleging Macmahon should have told the market about project delays and the financial consequences at least four months before it actually did in September 2012.
“People who purchased Macmahon shares between 2 May 2012 and 18 September 2012 have paid too much as a result of Macmahon’s alleged failure to keep the market fully informed of the financial impact of the delayed project,” Mr Lewis said.
“Macmahon let down investors by not making timely disclosure of the financial impact of the delays and shareholders are understandably angry.
“That the CEO and the Western Australian manager resigned and the HD4 management team was changed speaks volumes about the problem. Unfortunately, it was the Macmahon shareholders who also suffered.
“The class action is an opportunity for these shareholders to recover losses caused by Macmahon Holdings’ alleged misleading and deceptive conduct,” Mr Lewis said.
The class action is open to all current or former Macmahon Holdings shareholders who acquired shares between 2 May 2012 and 18 September 2012.
On 4 July 2011 Macmahon Holdings announced it had been awarded the HD4 project, with work to start in October 2011 and a scheduled completion during August 2012.
On 2 May 2012 Macmahon Holdings told investors that work had commenced on the HD4 project.
On 15 May 2012 Macmahon Holdings announced that it was accelerating works to complete the project by October 2012.
On 20 August 2012, Macmahon Holdings announced record profits for the 2012 financial year and forecast 20 per cent growth for the 2013 financial year, equating to a Net Profit After Tax (NPAT) guidance of between $60 to $70 Million.
The company stated that the HD4 project was 56% complete but said nothing about any likely financial impact on the HD4 project.
Only a month later on 19 September 2012, Macmahon Holdings announced a massive downgrade in its profit forecast estimating its FY2013 NPAT of between $20 to 40 million, representing a 41% to 71% profit downgrade.
The company gave as one of its reasons the significant additional costs of the HD4 project.
On the same day, the CEO, Nick Bowen resigned and Macmahon’s share price dropped by almost 40% or 20 cents per share to 32 cents per share.