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EXCERPTS
ABC Learning Centres is facing legal action from current and former shareholders on claims the company failed to meet its continuous disclosure obligations.
IMF (Australia) Ltd said it will fund claims that certain shareholders have against ABC regarding alleged misleading and deceptive conduct between August 27, 2007, and April 21, 2008.
"In particular, the proposed proceedings are for failure to disclose material information regarding the revenue reported in its 2007 financial year accounts and for providing guidance for the 2008 financial year without having a reasonable basis for the guidance," IMF said in a statement to the Australian Securities Exchange.
All shareholders who purchased ABC shares in the period are eligible to participate in the claim.
IMF said it will fund subject to a level of participation acceptable to IMF and will announce the claim value in its quarterly case investment reports.
In response ABC said it had not received any claim or any notice of claim.
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ABC said its share price has been affected by market rumours, investors trying to recoup shares held as security in margin loans, short selling, global market conditions, general market volatility.
The company said it has made disclosure regarding these matters and "other factors" to the market.
ABC, which funded its rapid expansion through extensive loans, struggled to refinance its debts as the cost of credit surged as a result of the US subprime mortgage crisis.
Co-founder and chief executive Eddy Groves has had to sell nearly all his stake in the company after a sharp drop in ABC's share price triggered margin calls on securities-backed loans.
ABC shares closed 0.59 per cent lower at $0.84.
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- reprinted from the Business Spectator