Dick Smith class action goes ahead
The lawsuit names the former chief executive of Dick Smith, Nick Abboud and ex-chief financial officer Michael Potts, as well as the company itself.
Financed by UK-based litigation funder Vannin Capital, the class action alleges shareholders were blindsided by the publication of “misleading and deceptive” financial statements in 2015 that did not give a “true and fair view” of Dick Smith’s financial performance.
Bannister Law principal Charles Bannister, whose firm is running the case, said a large number of Dick Smith shareholders had registered their interest in proceedings after collectively losing several million dollars.
“The inflated reported profit and overstatement of EBITDA (earnings before interest, tax, depreciation and amortisation) meant that shareholders did not have an accurate picture of the financial health of the company,” Bannister said in a statement on Friday.
“They are all very disappointed to have been let down by a company they believed in so much.”
One Dick Smith shareholder and plaintiff in the class action quoted in Bannister’s release, Rodney Van Royden, said he was made to feel a “fool” for trusting the picture of the retailer outlined in its annual report.
“I accept that there are risks in the share market…but I take calculated risks, based on publicly released information,” said Van Royden, quoted in the statement from Bannister Law.
“There were many mum and dad investors out there who were burnt by DSHE’s demise.
Dick Smith was offloaded by Woolworths to a private equity firm in 2012 for $94 million and subsequently floated on the share market a year later with a value of $520 million.
But its value plummeted and it was wiped from the share market’s top 200 companies in December, 2015, before going into voluntary administration the following month after failing to secure funds from its lenders.
The class action concerns the purchase of shares between February 16, 2015 and January 3, 2016 inclusive.
Bannister Law has invited shareholders to register for the class action, with the case to be heard in the NSW Supreme Court.
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