Forge class action widened
A class action against Forge Group potentially involving thousands of shareholders has been broadened to include those who bought stock nearly two years before the engineering company's $800 million collapse.
Litigation firm Bentham IMF has written to parties interested in joining the class action over alleged failure to meet disclosure obligations that the claim period has been revised to between March 2012 and November 2013.
The change takes the case back to a time before Forge's founding executives handed over the reins to David Simpson, managing director during the company's final 18 months. When the legal move was first announced, the claim period fell between January 2013 and Forge's collapse on February 11.
The litigation firm said the change followed recent advice from law firm Slater & Gordon.
The November 1, 2013 cut-off date means those who bought Forge stock after the company resumed trading on November 28 after a near four-week suspension are no longer eligible.
The amendment is understood to strengthen the prospects of success for eligible Forge shareholders, who were told by liquidators in March to expect a zero return on their investment.
The new March 7, 2012 start date for the legal action is when Forge published an investor presentation on the acquisition of power station builder CTEC.
CTEC, later known as Forge Group Power, became instrumental in the parent company's collapse because of massive budget blowouts on two projects.
Forge bought CTEC in January 2012. The presentation two months later said CTEC was a contractor which lowered risk where possible by sub-contracting work and procuring items guaranteed by renowned international supplier such as Siemens and GE.
"In acquiring the shares in CTEC and being able to subcontract some or all of the engineering and construction services we believe we have structured the transaction to better mitigate financial risk for the Forge Group," the document said.
Blowouts which ultimately topped $150 million on the Diamantina and West Angelas power station projects led Forge to suspend trading on November 4 when the share price was $4.18.
When Forge began trading again after announcing an ANZ Bank rescue, its shares collapsed to as low as 28.5¢.
Shareholders have been given until October 24 to join the class action. The litigators are targeting Forge's liability insurance for directors and company officers for a possible payout.
