National law firm Slater and Gordon yesterday (Tuesday 24 August) filed a class action in the Supreme Court of NSW against the mineral resources company, OZ Minerals Limited (ASX: OZL) on behalf of predominantly “mum and dad” investors.
The investors are claiming OZ Minerals failed to disclose the full extent of its debt and its refinancing difficulties as it struggled to stay afloat in 2008.
Already more than 140 retail investors have come forward claiming to have lost some AUD$18 million when the OZ Minerals share price fell by 80 percent and was suspended at 55 cents in November 2008.
The share price collapse came after the full extent of the company’s debt problems were revealed to the market for the first time in a corrective disclosure announcement made by OZ Minerals in December 2008 despite the company allegedly being aware of the problems as early as February 2008.
Investors allege OZ Minerals engaged in misleading or deceptive conduct and breached its continuous disclosure obligations by understating its liabilities by approximately AUD$300 million and by failing to inform the market of its refinance risk and its risk of insolvency.
The proceedings have been issued on behalf of and are open to all investors who purchased OZL shares between 28 February 2008 and 1 December 2008 who are not already involved in legal action against the company. The class action is being funded by national litigation funder, Litigation Lending Services.
Van Moulis, expert commercial litigation lawyer at Slater and Gordon, said he had been approached by investors concerned they had not been kept fully informed of OZ Minerals’ financial position after the company announced a trading halt in late 2008.
”These mum and dad investors are rightly concerned that the company failed to release important financial information that would have had a direct impact on the share price and their decisions to buy or sell their shares in OZ Minerals,” Mr Moulis said.
“The market relies on being fully informed and with OZ Minerals, we believe, our clients were sadly let down.”
The class action is listed for first directions in the NSW Supreme Court on Friday 3 September 2010.