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Slaters secures US funding for BBP class action

Slaters secures US funding for BBP class action

Slater & Gordon has received support from a new US litigation funder to investigate Babcock and Brown Power ("BBP") on behalf of shareholders.Slater & Gordon partner James Higgins told…

Slater & Gordon has received support from a new US litigation funder to investigate Babcock and Brown Power ("BBP") on behalf of shareholders.

Slater & Gordon partner James Higgins told Lawyers Weekly the firm had obtained funding from a US entity which has yet to formalise its name, but is made up of partners from the Californian law firm Wasserman, Comden & Casselman LLP ("WCCL") and New York-based barrister Julian Hammond.

Higgins said the firm's investigation would examine the disclosures - which sent BBP's share price into a nosedive, including its announcements in December 2007, and May, June and August of 2008 - concerning its debt position and ability to meet its distribution guidance. During that period the share price fell from a high of $3.40 to a low of 25 cents. Unlike its parent company, the BBP subsidiary has not entered liquidation, but now trades at a fraction of its original share price.

"It's not a dissimilar type of case to Centro, about the disclosure of debt and how much was being financed during that period of time," he said.

Higgins added that, following the Alinta acquisition, BBP had made numerous statements that proved incorrect concerning its debt position and ability to obtain debt financing as well as its capacity to pay a distribution to shareholders.

"BBP seemed to have a desire to acquire, but once deals were done shareholders were forced to wait to find out the consequences arising from the debt position the company found itself in."

According to Higgins, Slater & Gordon has already been approached by shareholders who purchased shares in later 2007 to August 2008 and lost money, some suffering millions of dollars in losses.

Julian Hammond, representing the US funding group, said in a statement that he believed shareholders deserved answers on BBP's reduction in shareholder value.

"We are very pleased to be partnering with Slater & Gordon on this project and we are keen to develop a litigation funding business in Australia which assists shareholders to obtain access to justice," he said.

- Laura MacIntyre

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Slaters secures US funding for BBP class action
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