The nation’s largest dairy processor, Murray Goulburn, is facing legal action over allegations it mislead investors with information it provided for its partial listing last year.
The class action is believed to be the first legal move taken against the co-operative since it announced two weeks ago its profit forecast would be further downgraded, leading to a plunge in the unit price of milk.
That downgrade followed one in February when Murray Goulburn said global dairy commodity markets had become weaker, but its strategy was on track.
In a writ lodged in the Victorian Supreme Court by a superfund trust that bought 18,000 units, it is claimed the company and others made misleading representations when a prospectus was released in May last year, and forecasts made for sales volumes and revenues at the time were unlikely to be achieved.
Mark Elliott, the lawyer in charge of the class action, told ABC Statewide Drive the claim would be worth “many hundreds of millions of dollars”.
“We don’t think there was a proper basis for their income or their profit forecasts and we think that in the absence of a reasonable basis they shouldn’t have been so bullish,” he said.
“That’s the main allegation, that really the market has been trading ill-informed for about seven or eight months.”
Industry regulator and ACCC investigating co-operative
A Murray Goulburn spokeswoman said: “We do not consider that we have any issues with our continuous disclosure or the information contained in the Product Disclosure Statement”.
The writ also cited the indicative price that would be paid to farmers for their fresh milk.
That price was cut by up to 15 per cent at the time of the last profit announcement, throwing the industry into turmoil just two months before the end of the season and leaving many dairy farmers facing further debt.
The writ has been served against the company and others connected to the co-operative, including the now-departed managing director Gary Helou and board chairman Philip Tracy.
It comes as the co-operative is under investigation by the corporate regulator ASIC and competition watchdog the ACCC.
Dairy farmers are pushing for a milk levy to be included in any assistance package offered up by the Federal Government in the wake of the price cuts.
Source: ABC
