Shareholder class action looms for Treasury Wine Estates as millions of bottles of wine go to waste

28 October 2013
Leading litigation funder, IMF (Australia) Ltd, and Maurice Blackburn Lawyers, Australia's most successful class action litigator, today announce the funding of a class action against ASX-listed global wine merchant, Treasury Wine Estates Ltd ("Treasury Wines").

The class action concerns Treasury Wines' announcement on 15 July 2013 of up to $160 million of expected write-downs as a result of excess stock being held by its distribution partners in the United States ("US distributors"). The impairment included a $33 million provision to pour six million bottles of out of date wine down the drain.

The class action will allege that Treasury Wines misled the market and breached its continuous disclosure obligations in relation to the financial impact of over-stocked US distributors. The action will be on behalf of Treasury Wines shareholders, who lost millions of dollars when the company revealed the full extent of the problem in July this year.

Announcing the proposed class action in Melbourne today, IMF (Australia) Investment Manager Simon Dluzniak said the core issue related to alleged inadequate disclosure of issues associated with excessive inventory held by Treasury's US distributors.

"By not disclosing the possibility of a material write-down when we allege it should have, the company caused shareholders to suffer financial loss," Mr Dluzniak said.

"In the US wine market, the ban on producers selling directly to retailer outlets means that all of Treasury Wines' products must pass through third-party distributors. The level and makeup of inventory held by Treasury's distributors is critically important in this action.

"Treasury Wines' management told the market on multiple occasions throughout the 2013 financial year that the company's earnings would grow whilst it adequately managed its US distributors' inventory levels. We allege that the market was not told that the US distributor inventory levels of some brands were so high that Treasury Wines was at risk of having to destroy excess stock or give rebates or discounts to the distributors for excess, aged and deteriorating inventory."

Maurice Blackburn NSW Managing Principal Ben Slade said the case highlighted the very serious responsibility listed companies have to disclose material information to the share market.

"Evidence suggests that Treasury Wines knew, or should have known by 17 August 2012 that large write downs were inevitable," Mr Slade said.

"On that day Treasury Wines projected earnings growth when it must have been able to work out that massive write downs were on the horizon."

Mr Slade said that investors who buy shares in listed companies are protected by the Corporations Act, which requires companies to act honestly and to inform the market of material facts that might impact on their share price. If those fundamental protections are breached, shareholders who suffer loss have a right to seek compensation.

Investors who acquired Treasury Wines shares between 17 August 2012 and 14 July 2013 inclusive may be eligible to participate in the class action.

To find out more about the action visit www.imf.com.au or call 1800 016 464.

About IMF (Australia)

IMF is Australia's largest litigation funding company. IMF's principal activities are the investigation, management and funding of claims in Australia and other jurisdictions.

IMF has successfully funded numerous shareholder class actions and since 2001 IMF has recovered in excess of $1.2 billion dollars for its clients across a range of commercial, insolvency and multi-party cases.

About Maurice Blackburn

Maurice Blackburn's class action practice is the largest in Australia and has secured more than $1billion in settlements for shareholders, businesses and consumers over the past 15 years.

Maurice Blackburn is the only class action law firm to have achieved settlements over $100m including those against Centro ($150m) Aristocrat ($144.5m), NAB ($115m), GIO ($112m) and Multiplex ($110m).
Over the past decade Maurice Blackburn has settled several shareholder and cartel actions against big companies such as AWB, Nufarm, Oz Minerals and a price fixing cartel action against various multinational vitamins companies. In 2011 a massive cartel claim against Amcor and Visy was settled for $120m - the largest cartel settlement in Australian corporate history.

The firm is currently acting in a series of other class actions for shareholders, victims of bushfires, floods, faulty products and a price fixing cartel. It is also conducting a series of class actions against banks over bank exception fees in conjunction with IMF.