Oz Minerals has settled two class shareholder lawsuits for $60 million which claimed the mining company failed to disclose its true debt position during the global financial crisis.
The settlement has come at an interesting time for Centro which is bang in the middle of defending a lawsuit brought by the corporate regulator lawsuit in the Federal Court. The Australian Securities & Investments Commission (ASIC) alleges Centro misled the market in 2007 by failing to disclose a $1 billion debt as a short term liability.
Instead, Centro booked the debt as a long term liability at a time when, after the meltdown in credit markets in mid-2007, banks were demanding early repayments and shareholders were jittery about their companies’ ability to refinance.
Nine months later, backed by litigation funder IMF Australia, the plaintiff law firm Maurice Blackburn brought its claim against Oz for breaching continuous disclosure laws. It was late 2008. The allegation was that the miner had misled shareholders by failing to properly inform the market about its debt position.
The Oz share price had fallen sharply in November 2008, six days before the company first told the ASX that it was seeking an extension of time for repayment of two facilities: one for $US420 million ($615 million), payable in instalments out to 2012; the other for $US140 million.
The other major plaintiff law company Slater & Gordon later brought a similar action in which 140 retail investors claimed a loss of $18 million when the stock was suspended at 55 cents in November 2008.
Oz has agreed, conditionally, to settle the IMF/Maurice Blackburn case for $35.9 million plus costs of $3.1 million while the Slater & Gordon matter will settle for $19.2 million plus costs of $1.8 million.
If court approval is won IMF estimates it will receive $15 million which should deliver it a profit of $12 million.