Australia's Transpacific Industries - the biggest player in New Zealand's waste management market - has reached a A$35 million ($43.9 million) settlement with shareholders who threatened to take a class action alleging breaches of disclosure rules between 2007 and 2009.
Transpacific Industries (TPI) said it had concluded its discussions with compensation lawyers Maurice Blackburn in relation to the proposed securities class action, which was funded by IMF Australia, on behalf of investors who acquired TPI shares between the years in question.
As a result, the parties had reached an agreement to settle the proposed class action for an amount of up to A$35 million, or about A$24.5 million after tax, subject to conditions, with A$25 million payable in June 2012 and up to A$10 million deferred until June 30, 2014, TPI said.
The settlement was reached on a commercial basis and there was no admission of liability by TPI, which ranks as a top 200 Australia-listed public company.
Chairman Gene Tilbrook said TPI had decided to participate in a structured mediation process because of the likely costs involved, and the uncertainties and risks associated with the claim, had it gone to court.
"The negotiated settlement with members of the proposed securities class action will resolve this action which grew out of events that occurred several years ago under a previous management regime," he said.
The final settlement amount will be included as a significant item in Brisbane-based TPI's annual results.
TPI listed in Australia in May 2005 and quickly embarked on an aggressive, mostly debt-funded acquisition programme.
It bought Australia's Cleanaway in 2005 and New Zealand's Waste Management in 2006, offering $8.64 a share. TPI bought several manufacturing companies in 2007 to form the Superior Pak waste equipment manufacturing business. In 2009, Warburg Pincus, a multinational private equity investment company, become a cornerstone investor in TPI.
In New Zealand, TPI's biggest competitor is EnviroWaste Services.
IMF, Australia's biggest litigation funder, said details of the settlement were confidential between the parties and depended on a percentage of group members providing a release to TPI from their claims.