Forge shareholders to get no return

Investors in collapsed engineering contractor Forge Group have been dealt more bad news, with the company's liquidators declaring shareholders' stock holdings are now worthless.  

Ferrier Hodgson partner Andrew Saker said the liquidators had reasonable grounds to believe there was no likelihood that shareholders in the company would receive any distribution in respect of their shares.

The news comes days after creditors voted to wind-up the company, whose debts have been estimated at more than $800 million.

Litigation funder Bentham IMF and law firm Slater & Gordon are pursuing a potential class action against Forge amid allegations of misleading and deceptive conduct by the company.

IMF says the shareholder claim will allege Forge knew or should have known about and disclosed problems at its Diamantina and West Angelas power station contracts before it first advised the market of the issues in November last year.

It will also allege that Forge misled the market ove the course of three profit downgrade announcements by stating that major financier ANZ Banking Group had waived covenants and confirmed ongoing support, without disclosing that this was conditional on Forge securing an injection of fresh equity.

About 120 people attended a second creditors meeting for the contractor in Perth last week, where Ferrier Hodgson advised that the company’s 1,600 former employees should start seeking government assistance.