Spotless facing second class action on plunge

SPOTLESS Group faces a second class action over financial guidance it provided in 2015 that caused a massive plunge in its share price.

Law firm Slater & Gordon yesterday filed proceedings in the Federal Court alleging Spotless issued guidance for its 2015-16 financial performance that misled investors.

Spotless, one of Australia’s biggest providers of facilities management services, is already the subject of a class action filed in February by William Roberts Lawyers, which centres on the accuracy of its financial results for the 2014-15 financial year, which formed the basis of its forecasts for the following year.

The new legal action comes as Spotless deals with a $1.26 billion takeover bid by Downer EDI. The company has again urged shareholders to reject the bid as its board believes the offer fails to properly value the company’s potential.

Slater & Gordon senior associate Mathew Chuk said Spotless forecast in August 2015 an improvement in its financial performance. It then downgraded its guidance three months later, which triggered a fall in its share price of more than 50 per cent over four days.

Spotless knew well before it made the downgrade that it was unlikely to meet its forecast, Mr Chuk said.

“This class action alleges that Spotless should never have set market expectations so high in such circumstances,” he said. Downer has extended its offer to Spotless shareholders until mid-June.