Current Class Actions - Downer EDI 
On 23 January 2007, Slater & Gordon Lawyers announced a potential class action against Downer EDI Limited on behalf of shareholders who allege that the company failed to fully inform the Australian Stock Exchange about its financial position.
On 8 August 2006, Downer EDI requested a trading halt before announcing a $199 million provision, resulting in a net loss of $25 million for the 2005/6 financial year. This profit guidance was the first issued by Downer EDI since its release of half year financial reports on 23 February 2006, at which time the company predicted a $125 million annual net profit.
The cause of the $199 million provision was an ongoing contractual dispute between Downer EDI and Iluka Resources Limited over the construction and development of the Douglas Mineral Sands Project in Victoria. When trading resumed on 9 August 2006, the price of Downer EDI shares dropped by approximately 30% from $7.40 to a close of $5.15.
Investigations indicate that there is a strong basis to allege that Downer EDI engaged in misleading or deceptive conduct when issuing its February profit guidance.
Further, there is also the strong possibility that the company acted in breach of its continuous disclosure obligations regarding the status of the Iluka dispute and its financial impact.
A preliminary estimate of the losses suffered by shareholders places the losses well in excess of $100 million.
Chronology of the share devaluation
On 28 July 2004, Iluka Resources Limited awarded Roche Mining Limited (a wholly owned subsidiary of Downer EDI Limited) an engineering, procurement and construction contract for a lump sum of $197.8 million for the Douglas Mineral Sands Project in Victoria.
The project was not completed on time, and a contractual dispute erupted between Roche and Iluka Resources in December 2005. This dispute culminated at the end of January 2006, when the parties decided to proceed to arbitration. Each made ASX Announcements in relation to the relative strengths of their legal position.
On 23 February 2006, Downer EDI released its half year reports, estimating a net profit of about $125 million.
Between 11 April and 29 May 2006, Downer EDI raised $156,982,311.60 through an Institutional Placement ($8.40), a Share Purchase Plan ($8.40), and a Dividend Reinvestment Plan ($7.82).
On 8 August 2006, Downer EDI called a trading halt mid-afternoon, with shares valued at $7.40.
After the markets had closed, Downer EDI released preliminary unaudited results for the financial year ending 30 June 2006, which estimated a net $25 million loss for the financial year.
The stated causes for the profit downgrade were non-recurring pre-tax construction contract provisions, forecast at $199 million, and relating to its contractual dispute with Iluka Resources. The results state that without the write down, the company would have posted a $138 million profit in the period.
On 9 August 2006, shares resume trading and the price drops more than 30 per cent or $2.25 to close at $5.15, after hitting a low of $4.91. A total of 22,422,988 shares were traded during the day, and many investors realised substantial losses.
Registration of Interest
We advise that registrations of interest in respect of this proceeding have closed.