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- Shareholders have issued a class action against multinational contractor CIMIC Group (CIM) regarding its investment in BIC Contracting
- Shareholders filed the class action through Victoria’s Federal Court earlier this week, claiming CIMIC did not properly disclosed financial information relating to its non-controlling stake in the Middle Eastern-based contractor
- Back in late January CIMIC shares plunged almost 20 per cent, after it revealed a $1.8 billion-dollar write-down due to unrecovered debts associated with BIC Contracting
- The court proceedings also relate to the company’s use of factoring arrangements in its cash-flow reports over the last two years
- CIMIC Group denies there is any proper basis for the claims and intends to defend itself in court
- CIMIC Group closed 0.61 per cent down for $22.29 per share
Shareholders have issued a class action against multinational contractor CIMIC Group (CIM) regarding its investment in BIC Contracting.
Shareholders filed the class action through Victoria’s Federal Court earlier this week, claiming the company did not properly disclosed information about its non-controlling stake in the Middle East-based contractor.
Back in late January CIMIC shares plunged almost 20 per cent in one day, after it revealed a $1.8 billion-dollar write-down in unrecovered debts surrounding the investment.
At the time, the company opted not to issue a dividend and was actively seeking to sell its 45 per cent stake, effectively exiting the region entirely. Shareholders are now claiming the information disclosed leading up to the share price drop was insufficient.
The court proceedings also related to CIMIC’s use of factoring arrangements in its recent cash flow reports.
Traditionally, factoring allows companies to sell accounts receivable to a third-party financier at a discount to help realise incoming cash more quickly. Conversely, reverse factoring allows companies to have its amounts owed to suppliers purchased by a financier, effectively transferring it to a third party.
How these factoring arrangements relate to financial reporting standards has been called into question recently, as they can substantially alter cash-flow disclosures without accurately depicting the amounts a company currently owes.
Whether these concerns relate to CIMIC Group’s financial reports remains to be seen. The company denies there is any proper basis for the claims and intends to defend itself in court.
CIMIC Group closed 0.61 per cent down for $22.29 per share
