The Federal Court today approved a settlement agreement between Sigma Pharmaceuticals and clients of class action lawyers Slater and Gordon.
In approving the terms of the settlement, Justice John Middleton congratulated the parties on reaching an agreement that was fair, reasonable and in the interests of group members.
Today’s approval follows a Federal Court mediation in Melbourne last month during which Sigma agreed to pay $57.5 million to class action group members.
Slater and Gordon principal Toby Borgeest said the deal was great news for participating shareholders.
“The settlement will benefit hundreds of ordinary retail investors, as well as substantial institutional investors,” Mr Borgeest said.
Slater and Gordon acted for more than 600 investors, large and small.
“Based on our assessment of the claims in this case, Sigma investors will recover nearly all of their losses under this settlement,” Mr Borgeest said.
He said today’s approval meant the firm could begin working to distribute funds and would be sending out cheques early in the New Year.
“Today's approval means the deal is confirmed, and that everyone - investors as well as the company - can be satisfied that the case has been resolved without the need for an expensive and costly trial,” Mr Borgeest said.
Sigma will not admit liability under the terms of the settlement.
Slater and 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.