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$46.5m settlement reached in G8 Education class action
Plaintiff law firm Slater & Gordon has finalised a massive class action settlement with large childcare centre operator G8 Education, in what is reportedly the first of its kind.
Grace Robbie
Slater & Gordon has secured a $46.5 million settlement on behalf of G8 Education Ltd shareholders who suffered significant financial losses following the downward revision of the national childcare centre operator’s 2017 earnings forecast.
The class action was also the first in Victoria in which the court made a “group costs order”, at 27.5 per cent. This allows the legal costs of the lead plaintiffs and group members to be calculated as a percentage of any award or settlement reached in the proceeding - making this settlement the first of its kind.
Slater & Gordon initiated the class action against G8 Education Limited in late 2020 on behalf of individuals who purchased G8 shares between 23 May 2017 and 23 February 2018. Those investors experienced financial loss when G8 downgraded its earnings forecast for 2017 from “around $160 million”.
In February 2017, G8 disclosed its actual earnings for 2017, revealing an “underlying EBIT of $156 million, $4 million less than the December 2017 Reforecast”.
The class action alleged that the company “engaged in misleading or deceptive conduct and breached its continuous disclosure obligations based on the earnings guidance it provided the market on 23 may 2017 and 21 August 2017.”
The case was scheduled to proceed to trial in late April 2024 before Justice Michael Osborne in Victoria’s Supreme Court.
Slater & Gordon lead plaintiffs, Paul Allen and Monika Allen, expressed their satisfaction with the reached settlement, highlighting it as “a good outcome for group members who invested in G8 shares.”
“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,” they said.
Kathryn Brown, Slater & Gordon class actions senior associate, said the firm was “pleased to have been able to reach this outcome for group members before the matter proceeded to a trial that was expected to last seven weeks or more.”
This settlement is still pending court approval and G8 has not admitted any liability.
