Home / World News / Macmahon Holdings settles shareholder class action over Rio Tinto project blowout for $6.7m

Macmahon Holdings settles shareholder class action over Rio Tinto project blowout for $6.7m

Macmahon Holdings has made a $6.7 million settlement over a class action regarding a construction project blowout six years ago.

A number of shareholders launched the Federal Court action in 2015 alleging the contractor breached stock market rules by not telling them about the financial impact of delays with the Pilbara rail and bridge project.

Macmahon today said the matter had been settled without admission of liability and was subject to court approval. The settlement included interest and the shareholders’ legal costs.

Lawyers for the shareholders had claimed Macmahon should have detailed the delays at Rio Tinto’s Hope Downs 4 iron ore project and the financial consequences at least four months before it did in September 2012.

Macmahon suffered a loss of at least $40 million on the contract and its share price halved. Nick Bowen quit as managing director and the company soon after exited construction to focus on mining.

Chairman Jim Walker said the decision to settle was a purely commercial matter, taken in the best interests of shareholders.

“Macmahon continues to deny any wrongdoing in this matter and it is important to note that the settlement is not an admission of any liability, nor a finding against the company or any individuals,” Mr Walker said.

“Resolving this historical matter in this way permits management to focus on the ongoing business of the company, without the risk, distraction or expense of a lengthy trial.”

Macmahon said the settlement would be recorded a one-off charge to its income statement for fiscal 2019. The amount is excluded from its underlying earnings before interest and tax guidance of $70 million to $80 million.

The contractor’s shares were up 0.5¢, or 1.9 per cent, to 27¢ at 10.35am.

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