Ann: Extension of Voluntary Suspension and Class Action, page-13

RCR Tomlinson hit with class action from Quinn Emanuel after share plunge

• https://www.copyright link/content/dam/images/h/1/6/3/g/r/image.related.afrArticleLead.620x350.h183vz.png/1542682692471.jpg
• RCR's institutional shareholders want chairman Roderick Brown to be replaced.

by Jenny Wiggins
RCR Tomlinson has been hit with a class action lawsuit following a $57 million write-down on two Queensland solar projects and a slumping share price as the engineering group extended its voluntary trading suspension and its contractors pulled workers off solar farms.
Litigation firm Quinn Emanuel Urquhart & Sullivan said on Tuesday it had filed class action proceedings against RCR on November 16 in the NSW Supreme Court.
The lawsuit, which is understood to be asking for tens of millions of dollars, will be financed by Burford Capital. The lead plaintiff is the trustee of a superannuation fund.
Quinn Emanuel partner Damian Scattini said it was "unlikely" the write-down announced by RCR in late August was a surprise to its management team. "Either they knew and hid it, or they didn't know [about the solar farm problems] which is probably worse."

RCR went into a trading halt on July 30 that lasted a month. On August 28 it reported a $57 million write-down on its Daydream and Hayman solar farm projects in Queensland and launched a $100 million capital raising at $1 a share.

When its shares re-opened for trading on August 30, RCR's stock price fell by more than 60 per cent, dropping to $1.05 from $2.80. The stock has continued to weaken, falling below the new issue price to close at 87¢ on November 9.
Quinn Emanuel is alleging that RCR breached continuous disclosure laws because its senior management team either were aware or should have been aware of the solar farm problems before announcing them to the market on August 28.
Brett Lee, chief operating officer for electrical contractor Inselec, told The Australian Financial Review that RCR was about 21 days overdue in paying bills for completed work and was not responding to emails or phone calls. RCR owes Inselec around $5 million, and is believed to owe around $10 million to two other contractors.
"We're not getting any communication from them regarding our outstanding debt," Mr Lee said.

Mr Lee said he had started taking workers off RCR's solar farm projects in Queensland after his insurer, QBE, told him on Monday that it would no longer cover any future debts incurred with RCR. Inselec previously had people working on RCR's Wemen solar farm project in Victoria, but they were unexpectedly fired by RCR in mid-October.
Michaella Rogers, chief executive of Mass Resources, said she had pulled 48 people off RCR's Clermont, Collinsville and Haughton solar farm projects in Queensland after "radio silence" from the company and also receiving notice that QBE would stop insuring its debts. "It was the straw that broke the camel's back," Ms Rogers said. "I had to protect the business."
Ms Rogers said she would not send back workers to RCR projects unless she received assurance from the company they would be paid.
RCR went into a second trading halt on November 12, warning it planned to make an announcement on its 2019 earnings outlook that would have consequences for its funding. The company is understood to be trying to get its lending syndicate, led by the Commonwealth Bank of Australia, to lend it more money.

On November 14 the company voluntarily suspended its shares from the Australian Securities Exchange, and on Tuesday it said the suspension was expected to last until November 27.
The second trading halt comes after RCR's chief financial officer, Andrew Phipps, resigned suddenly on November 7 citing "personal circumstances".
Former chief executive Paul Dalgleish also stepped down without explanation on August 7, receiving a $1 million termination payout.
The company is currently being run by non-executive board director Bruce James while it searches for a new CEO.

Top institutional shareholders who participated in the capital raising are understood to be furious with RCR's board and are pushing for the replacement of chairman Roderick Brown and an overhaul of RCR's senior management team.
Mr Brown was re-elected as RCR's chairman in late October but only 75 per cent of votes cast were in favour of him continuing in the job. Mr Brown joined RCR as an independent non-executive director in October 2005 and became chairman in January 2008.
The class action is open to shareholders who acquired shares in RCR between August 11 2017 and July 27 2018.