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Leading law firm Slater and Gordon and global litigation funder IMF Bentham Ltd have filed proceedings against Australia’s largest milk supplier Murray Goulburn Co-operative Co Limited and its subsidiary MG Responsible Entity Limited.

The claim is brought on behalf of current and former investors who acquired units in Murray Goulburn’s listed entity MG Unit Trust between 29 May 2015 and 26 April, 2016, including through the initial public offering in 2015, and who have entered into costs and funding agreements with Slater and Gordon and IMF respectively.

Slater and Gordon Senior Lawyer Andrew Paull said:

“We have had very strong interest in this class action. Our clients collectively invested many millions of dollars in the company, on the back of statements by Murray Goulburn that appear to have been made without any reasonable basis.

“More than 40 per cent of that investment value was lost in April 2016, when the company ultimately withdrew its previous market guidance.

“Murray Goulburn investors understandably feel that they have been misled and have engaged Slater and Gordon to seek to recover their losses in Court.”

The claim is based on allegations that:

  1. The Murray Goulburn entities misled investors by issuing the FY16 profit forecast in the PDS and/or the revised forecast in February 2016, without a reasonable basis;
  2. The Murray Goulburn entities are responsible for breaches of continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001 (Cth) by failing to announce the FY16 downgrade, prior to 27 April 2016.

The class action is being funded by IMF Bentham and participants will not be required to pay any fees unless the class action is successful.

Murray Goulburn Timeline

On 29 May 2015, the MG Responsible Entity issued a Product Disclosure Statement (PDS) 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 between $39 and $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 Co-operative’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.

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