Lendlease Faces Potential Class Action Lawsuit Over Failing Engineering Arm
Amongst rumours of Lendlease’s impending sale to Samsung, Law firm Maurice Blackburn is currently assessing the viability of a class action lawsuit against the Australian property giant.
Currently seeking registrations on its website from investors who bought Lendlease shares between February and November last year, Maurice Blackburn alleges that the company breached continuous disclosure laws in relation to its troubled engineering and services arm.
Maurice Blackburn alleges that Lendlease was in breach of the Corporations Act when it failed to report the degree to which its engineering business was underperforming, engaging in “misleading” conduct.
Principal lawyer for Maurice Blackburn’s class actions, Rebecca Gilsman, said Lendlease’s experience in the industry means that they should have been aware of the problems.
“If they are a listed company that has very significant investments of funds, they need to have systems in place that allow them to properly track and report on these projects,” she said.
While a formal decision on the lawsuit is yet to be made, Maurice Blackburn has recovered wins exceeding $100 million across seven previous class actions and is “confident” to proceed.
Lendlease’s November 9 announcement of a $350 million writedown on its underperforming engineering and services business sent share prices into a nosedive, dropping to just $14.25 after closing at $17.45 the day before the news broke. This translated to a market value loss of $2 billion for the company over the following days.
Blame for the writedown fell on lower productivity on its NorthConnex project for Transurban, “excessive” wet weather, and issues stemming from design defects on other projects.
NorthConnex Project (Image source: Lendlease)
After heavy speculation, Lendlease put the engineering business up for sale, which is being handled by investment bank Morgan Stanley and adviser Gresham Partners. Analysts believe that separating out its services business for individual sale would be easier than offloading both at once. Lendlease is also selling $200 million worth of equipment to recoup its losses.
As of last week, Lendlease said it would “vigorously defend” any action taken against them, though legal proceedings are yet to be initiated.
Header image source: Lendlease