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TWE faces class action after sudden drop in share price

Australian winemaker Treasury Wine Estates is facing a second class action from shareholders led by Maurice Blackburn Lawyers over possible breaches of market disclosure laws.

Similar to a previous action settled in 2017 for $49 million, the investigation centres around market disclosures about the business in the US and the health of its commercial wine category, which were followed by sharp falls in the company’s share price.

The concerns in the latest potential claim arose from a TWE statement released to the ASX on January 28 downgrading its 2020 earnings forecast from an expected uplift of 15-20 per cent to 5-10 per cent.

The company also reported a 26 per cent decline in FY20 earnings from the previous year in the US to $98.3 million. Many of its problems in the American wine business were raised including leadership changes, US wine market dynamics; and a need to “manage” the business “differently”.

Following the announcement, the company’s share price plummeted 20 per cent in the space of two days.

“Like this recent announcement, the earlier class action we ran against Treasury also concerned an alleged failure to disclose serious problems in the Americas, particularly in Treasury’s Commercial wine,” Maurice Blackburn class actions principal Miranda Nagy said in a statement.

Nagy said they will be investigating whether the facts are connected and whether Treasury has “learned its lessons from the past”.

In 2013, the problems at Treasury led to a $160 million provision and the destruction of a large quantity of excess aged wine held by US distributors.

Nagy said the announcement raises serious questions about Treasury’s disclosure culture.

“Treasury shareholders would naturally have expected a high standard from the company after the events that prompted the last class action,” she said.

“If Treasury has breached continuous disclosure laws, we will be looking to take action to assist investors once again to obtain financial redress for their losses.”

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