Woolies dodges suit

WOOLWORTHS has dodged a $100 million class action over a shock profit downgrade linked to its failed Masters experiment after litigation funder IMF Bentham said it was dropping the matter.

IMF said it has decided to drop the case against Woolworths, snuffing out what could have been a costly and drawn out legal battle for the supermarket giant.

“After careful deliberation and further investigation, it considers that the proposed class action no longer meets its investment criteria and has accordingly decided not to proceed with funding the claims,” IMF said yesterday.

The litigation funder said it would write off about $151,000 in costs it had accrued looking into the matter.

IMF and law firm Maurice Blackburn had threatened the nation’s largest supermarket chain with a $100 million class action over a profit downgrade issued in mid-2015 which sent its share price into a spin.

The February downgrade – which prompted a 14 per cent fall in Woolworth’s share price over two days – was issued as the retailer tried to stem big losses from its Masters business.

Former Woolworths chair Ralph Waters had told investors the company could meet its original profit guidance at its general meeting in November 2014.

Woolworths announced in mid-2016 it was closing Masters after the hardware chain notched up $4 billion in writedowns and losses.

The winding up of Masters has delivered Woolworths several legal hits including being dragged into court by its US partner.

Shares in Woolworths closed 0.4 per cent lower at $27.09.

Shares in IMF closed 0.7 per cent higher at $3.09