Legal action has been launched against engineering services firm WorleyParsons following a profit downgrade by the company that caused a sharp drop in its share price.
WorleyParsons shares shed more than 21 per cent of their value on November 20 when the company said it was expecting an underlying net profit of between $260 million to $300 million in the 2013/14 financial year.
A month earlier, the company had told shareholders it expected earnings in 2013/14 to be better than in the previous year.
Lawyer Mark Elliot, acting on behalf of Melbourne City Investments, lodged a writ and a statement in the Supreme Court of Victoria on Wednesday.
WorleyParsons said on Thursday it has received a fax from Mr Elliot, who alleges the company had failed to comply with its continuous disclosure obligations before providing the trading update last month.
“The company denies there is a proper basis for the alleged claim and advises it will vigorously defend these proceedings,” it said in a statement.