Downer faces second class action lawsuit over breach of contract disclosures

(Reuters) – Australia’s Downer EDI said on Friday it was served with a second class action lawsuit by certain shareholders alleging breach of disclosures regarding a maintenance contract undertaken by the company’s segment in July 2019.

The class action, filed on behalf of shareholders who purchased Downer shares between July 2019 and February 2023, comes after the Australian contracting firm last December admitted to overstating its pre-tax earnings due to accounting irregularities.

As a consequence of accounting discrepancies, Downer had revised down its FY23 underlying net profit after tax attributable forecast to between A$210 million ($140.60 million) and A$230 million from prior expectations of 10% to 20% growth on FY22’s A$225.3 million.

Earlier last month, a shareholders’ lawsuit was filed against Downer, claiming it breached certain disclosure obligations under listing rules while also making misleading statements over its financial performance.

Downer shares have lost 24% since the company disclosed the irregularities and its forecast downgrade on Dec. 8, as of last closing value.

The Sydney-based company has been reeling under extreme regulatory scrutiny, which even led its chairman and finance chief to step down earlier this year.

Downer is already sidelined by New South Wales’ corruption regulators stating that employees dishonestly benefited from the payment or application of public funds for their own private advantage.