The success of a $200 million class action case against the property group Centro Retail Australia is a win for all Australian investors, lawyers for the shareholders say.
Law firm Maurice Blackburn, which represents thousands of investors who have been battling the debt-ridden company, confirmed today that an in-principal agreement for the company to pay out $200 million had been reached.
"This is a very good day for Centro shareholders and a very good day for the Australian investor community generally," the firm's class action principal Martin Hyde told reporters.
Centro Retail Australia went into a trading halt on Tuesday pending an announcement on the settlement discussions.
About 5000 investors, some of whom lost their life savings, have accused Centro of misleading and deceptive conduct for not disclosing in 2007 that it had at least $3 billion of interest-bearing debt falling due within 12 months.
When it did disclose the debt, as is legally required by the Australian Securities Exchange, its shares plunged by 76 per cent in one day on December 17, 2007.
Centro has since restructured itself as the listed retail property trust Centro Retail Australia, including the Centro Retail Group.
However, its other entity, the more debt-ridden Centro Properties Group, was abandoned and the new entity claims it should not be responsible for the old entity's past mistakes.
The case, which may be the biggest class action in Australian history, began in Melbourne on March 5, more than four years after the shopping centre owner and funds manager nearly collapsed under $5.7 billion of debt.
