Investors consider class action against waste millionaire Terry Peabody’s Transpacific Industries

Waste management giant Transpacific Industries could face a multi-million dollar class action from investors who claim the company misled and deceived the market by failing to meet its continuous disclosure obligations prior to a huge slump in profit.

The move is another blow to the company’s founder and major shareholder Terry Peabody, who was once dubbed Australia’s golden garbo after amassing a $1 billion fortune on the back of his stake in Transpacific.

But in less than three years, the value of his stake has plunged from $1.03 billion to just $131 million as Transpacific has struggled under a mountain of debt and mounting losses.

The proposed class action was announced yesterday by litigation funder IMF, which says the claim will be open to sophisticated and professional investors only by way of an unregistered managed investment scheme (ASIC has not granted IMF rights to bring ordinary shareholders into the class action).

“The TPI claims relate to alleged misleading or deceptive conduct and alleged breaches by TPI of its continuous disclosure obligations between February 28, 2008 and February 16, 2009,” IMF said in a statement to the ASX.

Of particular issue are statements made by TPI between late 2008 and early 2009.

At TPI’s annual general meeting in November 2008, the company confirmed its previous profit forecasts for the 2008-09 year, stating there was “every indication that we will deliver organic growth of 13-16% at the EBITDA level”.

But on February 16, 2009, the company announced that falling commodity prices, lower sales in its truck division and currency movements would force it to recast its 2008-09 forecasts.

Its shares slumped from $2.90 to $1.80 on February 16 and the company would eventually post a 16% fall in reported EBITDA for the period.

Transpacific is yet to comment on the class action proposal.