Multiplex has had a well-publicised history of troubles with its construction of the new Wembley Stadium in London.
Recently Maurice Blackburn Cashman announced it has been instructed to commence a class
action against Multiplex Limited on behalf of security holders who purchased or
acquired an interest in securities in Multiplex between 2 August 2004 and 30 May 2005 (before it announced the extent of cost increases and delays at Wembley).
ASIC has now announced that it has reached agreement with Multiplex that it will set up a compensation fund providing for a maximum $32 million for those investors
affected by the failure of Multiplex to meet its
continuous disclosure obligations.
ASIC identified its concern over disclosure related to the 2
February 2005 meeting of the Multiplex Board, where the Board decided
to adjust the profit forecast from the Wembley project from £35.7
million to zero. However, this material change in financial position
was not disclosed to the market until 24 February 2005.
When the announcement was finally made on 24
February, the Multiplex share price dropped from the 23 February price
of $5.57 (Volume Weighted Average Price) to $4.76 (VWAP) on the day of
the announcement.
ASIC contended that the Multiplex Board’s decision
was price sensitive and should have been disclosed to the market before
the commencement of trading on 3 February 2005, immediately following
the resolution of the Board at its meeting on the afternoon of 2
February 2005.
In return for compensation, shareholders who accept
the offer will waive their right to take any legal action in respect to
the issue.
Multiplex says that in the 22 months since the ASIC investigation commenced, Multiplex has
made significant advances in restructuring its governance practices and
in improving its disclosure practices. During this period, a number of
important initiatives have been implemented including changes to the
composition of the board and to the senior management team. Multiplex
has also introduced a range of new systems and processes including more
robust risk management and review procedures.
