Sour times for Australian winemaker

  • Business
  • Wednesday, 26 Feb 2003

MELBOURNE, Australia (AP) - Australia's corporate watchdog said Wednesday it was launching a court action against Southcorp, the country's largest winemaker, triggering another slump in the company's already beleaguered share price. 

The Australian Securities and Investments Commission, or ASIC, said it will prosecute Southcorp for allegedly breaching its obligations to disclose important information to the Australian Stock Exchange last year. 

The court action relates to an e-mail sent by Southcorp's then corporate affairs manager, Glen Cunningham, on April 18, 2002, to a few analysts on the likely impact of the poor 2000 vintage for premium wines on Southcorp's 2003 gross profit. 

The company - whose wines include popular brands Penfolds, Lindemans and Rosemount - has said it had not broken disclosure requirements. 

Under the Corporations Act, Southcorp could be fined up to 200,000 Australian dollars (US$120,000) if it is found guilty. 

"This is the first case of its type commenced by ASIC and will test the operation of both the ASX listing rules and the relevant provisions of the Corporations Act,'' ASIC chairman David Knott said. 

The ASX is the Australian Stock Exchange. 

No date was immediately set for the hearing.On Wednesday, shares in Southcorp dropped 5 percent, or 18 cents, to A$3.38 after plunging 20 percent Tuesday after the company announced a sharp drop in its net profit for the first six months of the fiscal year. 

It blamed the drop largely on a price war in Britain. 

Southcorp reported a 97 percent drop in first-half net profit to A$5.7 million (US$3.4 million) and said it would not meet its own recently downgraded full year earnings forecast of A$287 million (US$172 million). 

The Australian fiscal year runs from July 1 to June 30 the following year. - AP 

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