Shareholders to sue Billabong

Billabong says it intends to vigorously defend the claim. Photo / Natalie Slade

Surfwear group Billabong is facing a multimillion-dollar shareholder class action over the timing of earnings downgrades that sparked massive share price falls.

A Melbourne retail investor whose A$30 million ($30.9 million) investment in Billabong halved in value in just over a month is leading the class action.

Newstart 123, trustee of the Malone family superannuation fund, claims Billabong misrepresented its earnings forecasts and failed to disclose critical information to the market over the course of 2011.

Billabong said it "wholly rejects and intends to vigorously defend the claim".

Shareholders who suffered losses during 2011, which could run into hundreds of millions of dollars, are able to join the class action.

Newstart's claim focuses on several statements made by Billabong between February and December 2011, when the company's share price fell from A$8.51 to A$1.70.

After forecasting a steady full-year profit in February, Billabong downgraded its earnings forecast in August and again in December.

Had more information been disclosed to investors, the effect of downgrades on Billabong's share price would have been different, the statement of claim says.

Billabong's shares have now dropped to A60c.

- AAP