- Telco Vocus (VOC) has settled a class-action suit launched against it in April
- The ASX 200-lister is settling for $35 million
- Law firm Slater & Gordon alleged Vocus misled and deceived shareholders who bought in between five months in 2016 and 2017
- In May 2017, Vocus posted drastically lower profits forecast for the financial year
- After reporting up to a potential $55 million downgrade it led to speculation the telco had withheld details from shareholders
- Following the announcement in 2017, Vocus’ share price fell around 32 per cent
- Today, the market has responded favourably to Vocus’ settlement. Shares in the company are up just over two per cent to trade for $3.01 each
ASX 200 Telco Vocus (VOC) has settled the class action launched against it in April for $35 million.
Law firm Slater & Gordon alleged the company had misled and deceived its shareholders who bought into the company between November 29, 2016, and May 2, 2017.
In May 2017, Vocus issued a major drop in its fiscal year earnings guidance. Forecast profits went from between $205 million and $215 million to between $160 million and $165 million.
This led to speculation that the major telco had intentionally withheld information regarding its financial performance from its shareholders previously.
Vocus blamed the serious downgrade on delayed revenue due to several projects taking longer than expected. Additionally, lower than predicted customer billings, increased delivery costs and the need for more staff also led to the profit drop, according to Vocus.
The day following the release of the revised earnings, Vocus shed over $1 from its share price, recording a 32 per cent loss from its opening price on May 2 and its closing price on May 3, 2017. The company’s share price fell from $3.46 to $2.35.
In today’s release to the market, Vocus wrote the “board determined that the agreement to settle the class action was a commercial decision made in the best interests of the company and its shareholders.”
Vocus said it will contribute $3.5 million to the settlement which will be reported in its underlying earnings before interest, tax, depreciation and amortisation. The company detailed the remainder of the settlement is fully insured.
The settlement comes without admitting any liability and is still subject to approval by the Federal Court.
The market is responding favourably to the settlement, with Vocus’ share price up just over two per cent after midday trade. Shares in the company are now worth $3.01 apiece.