Investors in collapsed toll road operator to launch class action

The listed litigation funder IMF says investors have already signed up for its $700 million class action against AECOM, the company which provided traffic modelling forecasts for the collapsed toll road operator RiverCity Motorways.

Andrew Charles, IMF investment manager – Queensland, says the case is looking at two things: how AECOM got its figures for the relevant Clem7 tunnel in Brisbane so wrong, and why it did not inform shareholders about a previous forecast tipping much lower traffic numbers than those included in the product disclosure statement.

IMG is alleging that AECOM’s statement in the 2006 product disclosure statement for the RiverCity float were misleading or deceptive, and AECOM failed to provide investors with critical information relevant to their decision.

AECOM’s PDS tipped the average daily traffic through the tunnel would be 90,000 per day. But Charles says the PDS didn’t mention that a report 18 months prior had forecast only 57,000 a day.

Charles says the stark difference between the two forecasts could have a major impact on the project’s viability. The debt-laden RiverCity collapsed in February.

“If you’re an investor putting money into a project reliant on forecasts, wouldn’t you want to know?” Charles says.

While acknowledging that forecast modelling is not an exact science, he says traffic predictions of 90,000 for six months after the tunnel’s planned opening in 2009 clearly did not match today’s figures of 24,000 per day.

He draws attention to a report by Wilson HTM that 80,000 cars were needed to avoid a debt default.

RiverCity unitholders – which paid two instalments of 50 cents each – have until May 12 to join the class action.

Charles says some unitholders have signed up, but declined to report the numbers or names of the parties.

If enough register interest, IMF plans to take the case to the Federal Court.

According to reports, AECOM – formerly known as Maunsell Australia – said yesterday the PDF “clearly described the project risks, assumptions and indemnities.”

“Since our services were completed in 2005/2006, there have been significant events that have affected the local economy, employment and the behaviour of commuters,” AECOM is quoted as saying.