Slater & Gordon has announced a conditional agreement to settle a shareholder class action against Sigma Pharmaceuticals Ltd.
During a Federal Court mediation in Melbourne yesterday, the parties agreed to a conditional settlement under which Sigma will pay a total of $57.5 million to class action group members.
Slater & Gordon class action lawyer Ben Hardwick said the deal was great news for participating shareholders.
“The settlement will benefit the substantial institutional clients, including banks and superannuation funds, and retail investors who backed the case. Our investor clients will no doubt welcome today’s developments,” Mr Hardwick said.
“Based on our assessment of investors’ claims, group members will recover the vast majority of their losses”
"We will be contacting group members in coming days to provide them with details of the settlement, the process for obtaining client and court approval and the next steps towards distribution."
The class action was funded by litigation funder Comprehensive Legal Funding (CLF). CLF has developed a strong track record of funding major successful class actions including Centro, Nufarm, Opes Prime and now Sigma.
“Fortunately for investors and the company the matter looks set to resolve without the need for a lengthy trial which of course reduces legal costs and maximises the returns to group members,” Mr Hardwick said.
Sigma will not admit liability under the terms of the settlement which will be put before the Federal Court for approval in coming weeks.
Slater & Gordon issued proceedings against Sigma in the Federal Court of Australia in October 2010 on behalf of hundreds of shareholders who purchased shares in Sigma between September 7, 2009 and February 25, 2010.
The class action principally relates to a profit guidance issued to investors prior to a capital raising in September 2009, in which Sigma forecast modest growth for the full year ending January 31, 2010.
On February 25, 2010, Sigma entered a five-week trading halt. When trading resumed on March 31, 2010, the company announced a net loss of $389m and goodwill impairments of $424.4m and an underlying net loss of $67.7m. Sigma's share price fell from 90c to 47c on the day of this announcement.
In the class action it was alleged that Sigma engaged in misleading or deceptive conduct in relation to the September 2009 guidance and also treatment of its goodwill. More recently, new claims were introduced alleging misrepresentations in relation to Sigma’s 2010 1H results and the purpose of the capital raising.