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Engineering and infrastructure company RCR Tomlinson Limited (ASX: RCR) is facing a class action in the NSW Supreme Court from aggrieved shareholders after it suffered a massive share price plunge in August.
Litigation firm Quinn Emanuel Urquhart & Sullivan filed the class action proceedings with financing from Burford Capital, a global finance firm focused on law.
The class action relates to RCR going into a trading halt on 30 July, 2018. On 28 August, it disclosed operational issues relating to two solar farm projects on Daydream and Hayman Islands in Northern Queensland, which led to substantial cost overruns and a net loss for RCR for FY2018.
When its shares were reinstated for trading on 30 August 2018, the share price fell by more than 60%, from $2.80 to $1.05, wiping out hundreds of millions of dollars of shareholder value.
The stock last traded at $0.87 on Friday 9 November. It went into a second trading halt on Monday 12 November.
"It's unlikely that the recent alarming disclosures by the company could have come as a surprise to management if they did, that's worse," says Damian Scattini, Partner at Quinn Emanuel.
"RCR shareholders have seen a catastrophic decline in their share value."
The two solar projects have been written down to the tune of $57 million and its contractors have withdrawn workers off the farms.
The class action alleges that RCR Tomlinson breached continuous disclosure laws because senior management were aware, or should have been aware, of problems at the solar plants.
The class action is available to shareholders who acquired RCR shares between 11 August, 2017, and 27 July, 2018.
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