Centro and auditor PwC have agreed to a record $200 million settlement with shareholders.
Investors, represented by law firms Maurice Blackburn and Slater & Gordon, sued the debt-laden suburban shopping centre owner in a class action over their losses when its share price collapsed in 2007.
Centro misstated its current liabilities in its accounts by more than $3?billion in 2007.
The shopping centre owner struggled to refinance its debt in late 2007, triggering a share price crash from $2 at the start of 2007, to only 50 cents by the beginning of 2008.
Ian Ramsay, a corporate law expert at the University of Melbourne, said the Centro payout is a record of its type.
“It would be right at the top in terms of shareholder class actions,” Ramsay told the Australian Financial Review.
Ramsay said the Centro case raised questions about the degree to which shareholders could rely on company announcements, and the extent to which a company’s misleading announcements can be blamed for causing shareholder losses, according to the AFR.
PwC defended claims from both the shareholders and Centro, its former client.
Centro and IMF, the litigation funder who funded the legal action, went into trading halts after the Federal Court was told a settlement was being negotiated.
Monday’s late night negotiations resulted in the $200 million deal, with auditor PwC paying about $66?million of the settlement.