RCR hit with class action

RCR Tomlinson has been served with a shareholder class action, as the engineering contractor requested a one week extension to its suspension from the ASX while it seeks to clarify its earnings outlook and funding requirements.

US-based law firm Quinn Emanuel Urquhart & Sullivan filed the proceedings against RCR on behalf of aggrieved shareholders last week in the Supreme Court of New South Wales.

The action comes after RCR’s share price fell by more than 60 per cent in August following a cost blowout at two solar projects in northern Queensland.

The cost overruns included a $57 million write-down at one of its projects.

The contractor also announced a $16.1 million loss for the 2018 financial year and a $100 million capital raising to help cover the cost blowout.

Long-serving managing director Paul Dalgleish resigned in the midst of the investigation into the project.

More recently, on November 7, chief financial officer Andrew Phipps resigned from the company.

“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,” Quinn Emanuel partner Damian Scattini said.

“RCR shareholders have seen a catastrophic decline in their share value.”

RCR said it was considering the claim and it would provide further update soon.

Quinn Emanuel will pursue the class action with financing from global outfit Burford Capital.

Burford managing director Craig Arnott said the company was pleased to be involved in the class action.

“Burford is glad to provide financing that enables Quinn Emanuel’s first-rate team to seek redress for shareholders, so that they can recover the value of their investment as quickly and cost effectively as possible,” he said.

Meanwhile, RCR also requested an extension to its ASX suspension until November 27.

The company entered a tradng halt on November 12 and suspended trading in its shares on November 14.

It said today the suspension would continue for another week, pending an update regarding its earnings for the 2019 financial year and the associated consequences for its funding.

The company said the review process was ongoing and thus an extension was required.

Shares in RCR last changed hands at 87 cents each.