Engineering firm RCR Tomlinson has requested an extension to its voluntary market suspension following news of a class action filed by a law firm on behalf of its shareholders.
Litigators Quinn Emanuel Urquhart & Sullivan (Quinn Emanuel for short) filed the class action proceedings in the Supreme Court of New South Wales on November 16.
The action relates to a large fall in RCR’s share price that occurred in August this year.
While RCR’s share price had seen a gradual decline since April, it suffered a sharp fall throughout August; on July 28, RCR’s share price was $2.12 but fell to $1.05 by September 3.
The August drop was largely related to issues arising from the company’s solar farm investments in Northern Queensland, which helped contribute to a statutory post-tax loss of $16.1 million in the 2018 financial year.
The Daydream and Hayman solar farm projects have suffered cost overruns and time delays resulting in a cumulative write-down of $57 million on the original tendered margin.
The year-to-date fall is even larger – from the start of 2018 to today, RCR’s share price has plunged over 70 per cent from $3.03 to just 85 cents.
“It’s unlikely that the recent alarming disclosures by the company could have come as a surprise to management – if they did, that’s worse,” said Quinn Emanuel partner Damian Scattini.
“RCR shareholders have seen a catastrophic decline in their share value.”
The class action pertains to shareholders who acquired ordinary shares in the company between August 11 2017 and July 27 2018.
RCR initially filed a trading suspension on November 14 pending the release of its earnings in the 2019 financial year.
It has now requested an extension of this suspension until whichever date comes first of either the company announcing its 2019 financial results or November 27.