On 16 August 2018, Slater and Gordon and litigation funder IMF Bentham Limited (ASX: IMF) commenced proceedings against Murray Goulburn Co-operative Co. Limited (Murray Goulburn or MG) and its subsidiary MG Responsible Entity Limited (MGRE) on behalf of aggrieved unitholders in Murray Goulburn’s listed entity the MG Unit Trust (ASX: MGC).
On 24 June 2019, the parties to the Endeavour River Class Action announced that they had reached an agreement to settle the proceeding for $42 million, inclusive of interests and costs. This agreement is subject to the approval of the Federal Court. The Settlement Agreement is available on request to group members in the proceeding.
What is the Endeavour River Class Action about?
The Endeavour River Class Action was issued by Slater and Gordon on behalf of Endeavour River Pty Ltd as lead applicant and group members who:
- acquired an interest in fully paid units (MG units) in the Murray Goulburn Unit Trust between 29 May 2015 and 26 April 2016;
- suffered loss and damage as a result of Murray Goulburn and MGRE’s conduct; and
- have entered into a litigation funding agreement with litigation funder IMF on or before 26 October 2018.
The key allegations in the Endeavour River Class Action are that Murray Goulburn and MGRE engaged in misleading and deceptive conduct when MGRE issued a product disclosure statement on 29 May 2015, in particular with respect to the financial forecast for the financial year ending 30 June 2016 (FY16). It is further alleged that Murray Goulburn misled the market, and failed to disclose to the market operator, information that had a material effect on the price of MG units between 29 May 2015 and 26 April 2016.
By engaging in the alleged conduct, it is alleged that Murray Goulburn caused the trading of MG units as a price significantly above their “true value”.
In separate proceedings brought by the Australian Competition and Consumer Commission against Murray Goulburn; the Federal Court of Australia has made declarations that Murray Goulburn engaged in conduct that was misleading and deceptive in making certain representations to farmers between 29 February and 27 April 2016 which are detailed by the Court accessible via Australian Competition and Consumer Commission v Murray Goulburn Co-Operative Co Limited  FCA 1964- .
Can I still register to be part of the Endeavour River Class Action?
Registrations to participate in the Endeavour River Class Action have now closed.
Is the Endeavour River Class Action the same as the Webster Class Action?
No. There is a separate class action filed by Elliot Legal on behalf of John William Cruse Webster as trustee for the Elcar Pty Ltd Super Fund Trust (Webster Class Action) against Murray Goulburn and others. If you are uncertain if you are a group member in the Endeavour River Class Action, please contact Slater and Gordon or IMF.
Background to Endeavour River Class Action
On 29 May 2015, the MGRE issued a product disclosure Statement which provided a forecast to its shareholders and unit holders of a FY16 net profit after tax of $85.8 million.
On 29 February 2016, Murray Goulburn announced a revised FY16 net profit after tax forecast of approximately $63 million, citing historically weak dairy commodity prices.
On 27 April 2016, only two months before the end of the financial year, Murray Goulburn downgraded its FY16 net profit after tax forecast to $39 to $42 million. In announcing the FY16 Downgrade, Murray Goulburn blamed:
- Weak growth in Chinese demand for adult milk products in the first half of April 2016, resulting in reduced expectations for sales and revenue during the fourth quarter of FY16;
- A strengthening AUD:USD exchange rate; and
- A downward revaluation of milk product inventory expected to be sold in FY17.
On the same day, Murray Goulburn also confirmed that its CEO and Managing Director, Gary Helou, and its CFO, Brad Hingle, would resign from their respective positions.
In response to the news, Murray Goulburn’s unit price fell more than 40 per cent from its prior closing price of $2.14 on 21 April 2016 to $1.26 per unit at close of trade on 27 April 2016.
We consider that by engaging in the alleged conduct described above, Murray Goulburn caused the trading of units in the MG Unit Trust at a price significantly above their “true” price during the Potential Claim Period.