Downer EDI subsidiary Spotless Group Holdings has settled a class action brought by shareholders who alleged they were deceived when Spotless downgraded its FY16 guidance in December 2015.
Slater & Gordon said on Friday the lawsuit was settled for $95 million.
“A settlement sum of $95 million is a reflection that this case was meritorious and Spotless recognised it as such,” Slater & Gordon practice leader Emma Pelka-Caven said.
Downer said that the settlement was “without admission of liability” and the impact on its results for the 2020 financial year would be $35 million.
The lawsuit was brought against Spotless in May 2017, a few months before Downer Group acquired the facility services company, which provides catering, cleaning, utility services, laundry and linen and security.
The class action alleged Spotless had engaged in misleading and deceptive conduct when it provided its FY16 guidance on 25 August 2015.
The proceedings was less than six weeks away from going to a hearing in the Federal Court, Ms Pelka-Caven said.
The lead applicant was small investor Alison Court of Hobart, a retired public servant who said she was very pleased with the outcome.
At 1452 AEDT, Downer shares were down 3.5 per cent to $4.19, while Slater & Gordon shares were up 2.5 per cent to 84 cents.