G8 Education agrees to $46.5m class action settlement
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The news: Early childhood education company G8 Education has reached a settlement on the class action commenced against it by Slater and Gordon on behalf of shareholders in November 2020.
The numbers: The total settlement amount was $46.5 million and will have a net cash impact to G8 of around $24.5 million, after tax and insurance contributions. Indemnity and from G8's insurers and existing provisions would also be applied to the settlement payment.
The company also noted that there will be no profit and loss impact to the group's expected financial results. The settlement remains subject to approval by the Supreme Court of Victoria.
The context: Law firm Slater and Gordon originally filed the class action on behalf of investors who lost money when G8 downgraded its earnings guidance for 2017 on 4 December 2017, and when G8 announced its actual earnings for 2017 on 26 February 2018.
The class action alleged G8 engaged in misleading or deceptive conduct and breached its continuous disclosure obligations based on the earnings guidance it provided.
The case is expected to be the first group proceeding in Victoria where legal costs will be calculated as a percentage of the settlement sum.
Gold Coast-based G8 said the settlement is without admission of liability, with the company's board determining that a commercial settlement is in the best interests of G8 and its shareholders.
What they said: Lead plaintiffs Paul and Monika Allen said: All companies listed on the ASX should comply with their duties and obligations to disclose information that is material to the market. We are pleased with this outcome".
The sources: ASX announcement , Slater and Gordon release
