Record-breaking $200m Centro class action win

9 May 2012
In the largest court case in Australia this year, Maurice Blackburn and IMF (Australia) have secured a major victory for Centro shareholders with an in-principle agreement to deliver a $200 million payout to end the long-running case.

Justice Gordon has given the parties until 10.15am tomorrow to agree the details of the settlement agreement. If the parties are not able to reach agreement as to the details by then, the Judge has indicated that the trial should resume.

Class Actions Principal at Maurice BlackburnMartin Hyde, said the agreement was a major win for shareholders with $150 million to go to Maurice Blackburn group members who have been funded by IMF and the remaining $50 million to Slater and Gordon group members (including costs).

"Our clients range from individuals, some of whom lost their life savings on Centro, through to the country's largest financial institutions. We are very pleased to have secured for our clients, an in-principle agreement to deliver the biggest class action settlement in Australian legal history," Mr Hyde said.

"This sends a strong message that corporations and their advisors will be held accountable to shareholders if their conduct falls short of what the law requires."
Since issuing Federal Court proceedings in 2008, Maurice Blackburn and IMF have fought a long battle on behalf of shareholders who lost money in Centro Properties Group and its listed affiliate Centro Retail Group.

The case involved allegations that Centro and its former auditors, PricewaterhouseCoopers, engaged in misleading and deceptive conduct and that Centro breached its obligations of continuous disclosure.

IMF's Case Manager, Wayne Attrill said that as funder of the action, IMF was pleased that the rights of ordinary investors had been recognised in their claim for compensation.

"The outcome means regulations protecting the market have been enforced, ensuring greater transparency in corporate disclosure in the future. In upholding the rights of thousands of Australian investors, it is a victory for the civil justice system," Mr Attrill said.

"None of these benefits would have occurred without litigation funding and support from institutional investors for the action," Mr Attrill said.

IMF has facilitated the payment of over $1billion in compensation to clients through its proud history of funding important cases.

Maurice Blackburn's class actions practice is the largest in Australia and has secured more than $700 million in settlements over the past 14 years (excluding Centro). Maurice Blackburn proudly states significant class action victories, including:

• GIO ($112m) settled August 2003
• Aristocrat ($144.5m) settled August 2008
• AWB ($39.5m) settled April 2010
• Multiplex ($110m) settled July 2010
• Oz Minerals ($39.5m ) settled July 2011
• Transpacific Industries Group Ltd conditional settlement ($35m ) April 2012

In March 2011 the firm secured the largest cartel settlement in Australian corporate history, against Amcor and Visy for $120 million.

Centro case history

In 2008, Maurice Blackburn, funded by IMF, issued Federal Court proceedings on behalf of shareholders alleging that Centro Properties Group and its listed subsidiary Centro Retail Group engaged in misleading and deceptive conduct by not disclosing the full extent of their known debts.

When the two companies eventually revealed the extent of their debts in December 2007 and admitted that they had been unable to refinance billions of dollars of debt that had become payable, their share prices fell dramatically.

It was alleged that Centro Properties and Centro Retail breached their obligations of continuous disclosure and that both companies engaged in misleading and deceptive conduct by failing to adequately disclose to their security holders and to the ASX:
• the full extent of their maturing debt obligations
• the risk that they may not be able to refinance their maturing debts at forecast cost or at all, and
• the risk that there was no longer a reasonable basis for their respective profit
forecasts.

The case was presided over by Justice Michelle Gordon.

For further details on the history of the case, visit our webpage.

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