NOTHING LIKE A CLASS ACTION FOR SLATER & GORDON TO MOVE ON

Written on the 29 April 2016 by Nick Nichols

NOTHING LIKE A CLASS ACTION FOR SLATER & GORDON TO MOVE ON

AFTER rankling shareholders with its own share price collapse late last year, listed legal group Slater & Gordon (ASX:SGH) has climbed back on the horse with plans to mount a class action of its own on behalf of Murray Goulburn investors.

Shares in Murray Goulburn slumped more than 40 per cent this week after the embattled milk supplier downgraded its FY16 profit forecast from $63 million to as low as $39 million.

It was the second downgrade by the company since it listed last year, with the company blaming lower dairy commodity prices and a slowdown in Chinese demand for infant formula.

The latest shock to investors led to the resignation this week of Murray Goulburn's CEO Gary Helou and CFO Brad Hingle.

Slater & Gordon, backed by litigation funder IMF Bentham, says it is investigating Murray Goulburn's profit guidance in its prospectus issued in July last year as a basis for the class action.

It says the potential class action will involve investors who bought units in Murray Goulburn's listed entity MG Unit Trust before April 27, including those who invested in the company's IPO in July last year.

Murray Goulburn had originally forecast a profit of $85.8 million for FY16, before downgrading that to $63 million on February 29, citing a downturn in dairy prices.

"On April 12, and again on April 18, Murray Goulburn confirmed that Chinese regulators were tightening regulations on imports of milk products into China, but denied that the anticipated regulatory changes would have a material impact on Murray Goulburn's business," says Slater & Gordon.

The legal firm is investigating whether Murray Goulburn misled investors with its initial prospectus forecast or with its downgraded profit forecast earlier this year. It also is investigating whether the company breached continuous disclosure obligations to investors.

"Our initial investigations have identified inconsistencies between Murray Goulburn's statements to the market regarding its likely profits in the 2016 financial year, and the factors that would affect its performance," says Slater & Gordon's senior class action lawyer Tim Finney.

"(Wednesday's) downgrade was of such a scale that it cannot be explained by the excuses that have so far been provided.

"We are investigating whether the true cause of Murray Goulburn's downgrade was an aggressively optimistic profit forecast, built into its product disclosure statement, that the company was simply never going to achieve."

Slater & Gordon's potential class action comes on the heels of the legal group enduring its own shareholder revolt late last year after it delivered a profit downgrade stemming from its trouble-plagued UK acquisition, Quindell.

Class action specialist Maurice Blackburn revealed it had received registrations from 'thousands of aggrieved shareholders' after Slater & Gordon's share price lost 90 per cent of its value over the past year.

In February, Slater & Gordon recorded a $958.3 million loss for the six months ending December last year, which included an $876.4 million impairment charge against goodwill and a $52.7 million impairment charge in the Australian business.

 


Author: Nick Nichols

Latest News

DOWNER EDI GRABS MORE THAN 50 PER CENT STAKE IN HOSTILE TAKEOVER TARGET SPOTLESS

DOWNER EDI Limited (ASX: DOW) now holds more than 50 per cent of Spotless Group Holdings Limited's (ASX: SPO) sha...

ACCODEX AIMS TO RAISE $5 MILLION CAPITAL, AWARD FOR CEO A CHERRY ON TOP

ACCOUNTANT Chris Hooper has never been one to shy away from voicing his opinion when it comes to the state of his ...

AVEO GROUP TO BUY BACK SHARES FOLLOWING MEDIA INVESTIGATION

FOLLOWING last night's Four Corners report which revealed accusations against Aveo Group (ASX: AOG) of financi...

STRUGGLING TEN NETWORK IS 'CASH POSITIVE' AND CAN BE SAVED, ADMINISTRATOR SAYS

THE ADMINISTRATORS of the Ten Network say the struggling broadcaster has cash to continue operating and have also ind...

Related News

DOWNER EDI GRABS MORE THAN 50 PER CENT STAKE IN HOSTILE TAKEOVER TARGET SPOTLESS

DOWNER EDI Limited (ASX: DOW) now holds more than 50 per cent of Spotless Group Holdings Limited's (ASX: SPO) sha...

STRUGGLING TEN NETWORK IS 'CASH POSITIVE' AND CAN BE SAVED, ADMINISTRATOR SAYS

THE ADMINISTRATORS of the Ten Network say the struggling broadcaster has cash to continue operating and have also ind...

METCASH NET PROFIT FALLS 20 PER CENT, ANNOUNCES CEO WILL STEP DOWN IN 2018

FOOD and grocery giant Metcash has announced its full year net profit has fallen more than 20 per cent and its CEO Ia...

SHARE PRICE PLUNGE FOR RETIREMENT VILLAGE OPERATOR AHEAD OF FOUR CORNERS INVESTIGATION

A RETIREMENT village operator which has been accused of charging excessive fees through complex contracts has respond...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter