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A company which funds class actions says it plans to sue childcare operator ABC Learning for breaches of company law.
Litigation provider, IMF Australia, will finance the class action to be brought by hundreds of shareholders who are seeking at least $100 million.
ABC Learning shares have slumped by more than 90 per cent over the past year.
Shares have been suspended from trade since last month and the company has until next Tuesday to release its long-delayed profit results for the 2008 financial year.
The managing director of IMF, John Walker, says the case will be launched once the results are released and it will focus on company disclosures over the past three years.
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Meanwhile, the Australian Shareholders' Association (ASA) says investors should make their own personal choice on whether to join the class action.
The ASA's Claire Doherty says investors need to take a number of factors into account.
"It is a difficult decision for shareholders. The ASA's position is that shareholders should consider each particular case on its merits and should use their personal discretion about whether they think they're going to be successful and what damage might be done to the company in the meantime," she said.
Ms Doherty says the class action against ABC Learning should shed light on how the troubled company is run.
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- reprinted from the ABC News