IMF claims WDS engaged in misleading and deceptive conduct between August 26, 2009 and April 27, 2010.

During that time WDS issued three profit downgrades, cutting its original prediction of a 2010 financial year profit of $26 million to a loss of $7-10 million.

In a market update on February 2 this year, the company reduced its guidance from a $22-24 million profit to a $7 million loss, blaming delays in the commencement of coal seam gas projects and “an aggressive bid environment resulting in increased tender competition and reduced margins”

The announcement caused WDS shares to nearly halve in value in one day, falling from $1.57 to 79c.

In the past year, WDS shares have fallen from a peak of $2.24 last September to their current price of 41c.

The company’s fall from grace claimed the job of chief executive officer and managing director Gareth Mann, who resigned in February.

In a release on April 27 this year, WDS said it was “strengthening project controls and reporting” and would institute “tighter financial controls and enhanced communication throughout all levels of the business”

In an open briefing on the same day, acting CEO Michael Jones said the company’s work in hand was $222 million, down from $349 million at June 30 last year.

“Our mining business continues to produce strong results but … there remains uncertainty around the timing of revenues from CSG associated work,” he said.

IMF said its class action is dependent on an acceptable level of participation by WDS shareholders.

Responding to the IMF announcement, WDS said it had not been contacted by any shareholders or former shareholders advising of their intention to proceed in the proposed litigation.

WDS reported some good news last week, winning a contract to build a 61-kilometre gas pipeline in New South Wales and gaining a two-year, $20 million extension of its coal mining contract at Vale’s Integra Mine in the Hunter Valley.