© Wikipedia/Shazdor

Penfolds' Magill Estate in south Australia, which is home to luxury brand Grange

Shareholders allege they were not kept properly informed.

Global drinks giant Treasury Wine Estates is facing a class-action lawsuit from Australian shareholders after oversupply issues forced six million bottles of wine to be poured down the drain.

Law firm Maurice Blackburn and class action funder IMF Australia said they were preparing a shareholder lawsuit against Treasury, the wine business spun off from Australian beverages titan Foster's in 2011.

The glut-hit wine company, which owns major brands including Penfolds, Wolf Blass and Beringer, shocked the market in July when it unveiled $160 million Australian dollars ($154 million) in write-downs related to oversupply problems in the United States. Treasury's then-CEO, David Dearie, was himself dumped by the company two months later.

"The impairment included a $33-million provision to pour six million bottles of out-of-date wine down the drain," IMF said in a joint statement with Maurice Blackburn.

The class-action suit, which has yet to be formally filed, will allege that Treasury failed to keep shareholders adequately informed of the overstocking of its U.S. distributors and the potential financial impact.

IMF said shareholders lost millions of dollars when the full extent of the problem of "old and aged" stock was unveiled in July.



"We allege that the market was not told that the U.S. distributor inventory levels of some brands were so high that Treasury Wines was at risk of having to destroy excess stock, or give rebates or discounts to the distributors for excess, aged and deteriorating inventory," said IMF investment manager Simon Dluzniak.

"By not disclosing the possibility of a material write-down when we allege it should have, the company caused shareholders to suffer financial loss."

Maurice Blackburn principal Ben Slade claimed that as early as August 2012, almost a full year before disclosing the write-downs to the market, Treasury "knew or should have known" that large losses were inevitable.

Instead, Treasury "projected earnings growth when it must have been able to work out that massive writedowns were on the horizon," Slade said.

Treasury issued a statement to the Australian stock exchange noting IMF's lawsuit announcement and adding that "no proceedings have been served against the company at this time.

"TWE strongly denies any allegations of wrongdoing and will defend any class action proceedings vigorously," the statement said.

Treasury was spun off from Foster's beer business after a production glut and the Australian dollar's run above parity against the greenback hit its export business.

Discussing the July write-down at this month's Treasury AGM, chief executive Warwick Every-Burns said particularly challenging conditions in the U.S. had seen annual net profits slump by 52.9 percent to 42.3 Australian dollars ($40.63m), despite earnings growth in every region except the Americas.

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Penfolds Owner Dismisses Chief Over Excess Stock