Claims

Class Action – RCR Tomlinson Limited (ASX:RCR)

ICP, which is uniquely focused exclusively on ASX shareholder claims has commenced investigations into a shareholder claim against RCR Tomlinson Limited (in liquidation) (RCR) in respect of continuous disclosure breaches and/or misleading and deceptive conduct.

Background to the allegations

ASX Code: RCR
ISIN: AU000000RCR7
Claim Period: Period 1 – 11 Aug 2017 to 27 Aug 2018

Period 2 – 28 Aug 2018 – 12 Nov 2018

Shares traded in Period (m): Period 1:

154.3 (traded)

25.4 (issued @ $3.55 ea)

Period 2:

102 (traded)

100 (issued @ $1 ea)

Background

On 28 August 2018, RCR announced it had earnings and cashflow problems in respect of two Queensland solar farms advisingthat:

  • it had done a “comprehensive internal investigation” into project cost blowouts related to the Daydream and Hayman Island projects;
  • steps were being taken to “mitigate the risk” of future cost increases being “undetected”; and that
  • issues were “project-specific”.

RCR subsequently raised $100 million to cover $57 million in writedowns on the Queensland solar farms (the Writedowns), inferring in its equity-raising prospectus that the procurement control issues experienced on the two solar farms were not systemic within RCR. At the time, RCR’s interim CEO Bruce James advised the Australian Financial Review that the two solar farms were the only sites with a “circumvention of our procedures” and that there was “no fraud”.

On 12 November 2018 RCR went into a trading halt and shortly after, administration.

Claim Overview

Continuous disclosure breaches and/or misleading and deceptive conduct centering around RCR’s profitability and liquidity issues not being limited to the Writedowns. The going concern issues raised by Deloitte in its FY18 Audit opinion were not resolved by the equity raising and change to RCR’s debt facilities directly after disclosure of RCR’s FY18 results.

Class Members

Shareholders who acquired an interest in RCR shares traded on the ASX during the period 24 August 2017 to 11 November 2018 inclusive may be class members. We may seek trade data from back further, subject to the outcome of the investigations.

Current Status
  • Three proceedings have now been granted leave under section 500(2) of the Corporations Act to proceed against RCR Tomlinson Ltd (In Liq) (RCR Tomlinson):
    1. Jones v RCR Tomlinson Ltd (In Liq) which is being funded by ICP with Shine Lawyers as the plaintiffs’ solicitors (Jones Proceeding);
    2. Ashita Tomi Pty Ltd v RCR Tomlinson Ltd (In Liq) which is being funded by Burford with Quinn Emanuel as the plaintiff’s solicitors (Ashita Proceeding); and
    3. CJMcG Pty Ltd v RCR Tomlinson Ltd (In Liq) which is being funded by IMF with Piper Alderman as the plaintiff’s solicitors (CJMcG Proceeding).
  • There has been co-operation between the plaintiffs in the Jones Proceedings and the CJMcG Proceeding, with a Joint Venture being entered into between ICP and IMF to seek consolidation of the proceedings, which means that it is likely that those two proceedings will be consolidated.  There will be a hearing of a carriage motion between the proposed consolidated Jones/CJMcG Proceeding on the one hand and the Ashita Proceeding on the other hand on 5 August 2019.
  • One of the important points of difference between the consolidated Jones/CJMcG Proceeding and the Ashita Proceeding is the length of the claim period.  In the consolidated Jones/CJMcG Proceeding, the claim is brought on behalf of persons who acquired shares or a long term exposure to shares in RCR Tomlinson by entering into equity swaps during the period from 11 August 2017 to 12 November 2018.  In the Ashita Proceeding, the claim is brought on behalf of persons who acquired shares or a long term exposure to shares in RCR Tomlinson by entering into equity swaps during the period from 28 December 2016 to 12 November 2018.