Consumer law firm Slater and Gordon is swooping in to grab a piece of what’s left of the Murray Goulburn (MG) dairy business, launching a class action case on behalf of disenchanted shareholders.
The compensation claim specialist is confident of arguing in court that MG’s shock profit downgrade on April 27, 2016 was the result of previously overly ambitious and optimistic earnings forecasts amid deteriorating market conditions, “rather than any factors beyond its control”.
The law firm, backed by litigation funder IMF Bentham, is seeking out investors who lost money on MG’s listed shares for a class action against the dairy co-operative and its subsidiary, MG Responsible Entity Limited (MGRE).
The move follows close behind Thursday’s shareholder vote to sell the company’s assets for $1.3 billion to Canada’s Saputo Inc.
About $200 million has been set aside from the sale proceeds to cover legal claims against the co-op.
Other class action moves by investor advocates have already been initiated in the Federal Court and the Supreme Court of Australia.
The latest class action claim assumes MG’s directors and management misled shareholders and the wider share market. It is open to current and former investors who bought shares in MG's Australian Securities Exchange-listed entity MG Unit Trust between May 29, 2015 and April 26 the following year and lost money because, according to Slater and Gordon, they were misinformed.
The firm’s planned class action against Australia’s largest milk processor spans the 2015 initial public offering period for the unit trust which represented almost a third of the company’s value when it floated in 2015.
A senior associate with the firm, Andrew Paull, said registrations for unitholders wanting to join the class action would be open until May 18. Formal proceedings would be filed soon after, subject to sufficient interest.
“Thorough analysis of the recent Australian Competition and Consumer Commission and Australian Securities and Investment Commission inquiries into MG has strengthened our initial findings that suggest the company misled the market by forecasting profits it could never achieve in the 2015-16 financial year,” he said.
MG said no court proceedings related to the proposed class action had yet been taken against it and MGRE.