NOTABLE CASES

MG Unit Trust Settles for $42 Million in Australian Class Action

JUNE 28, 2019

CASE SUMMARY

The claim relates to guidance provided by Murray Goulburn in its Product Disclosure Statement (PDS) issued on 2 July 2015 regarding its likely revenue and profits from the sale of milk products during the financial year ending 30 June 2016 (FY16). In its PDS, Murray Goulburn forecast a FY16 net profit after tax (NPAT) attributable Murray Goulburn shareholders and MGC unitholders of $85.8 million. On 29 February 2016, Murray Goulburn announced a revised FY16 NPAT forecast of approximately $63 million, citing historically weak dairy commodity prices.

On 12 April 2016, and again on 18 April 2016, 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.

Then, on 27 April 2016, only two months before the end of the financial year, Murray Goulburn downgraded its FY16 NPAT forecast to $39 – $42 million (FY16 Downgrade). 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.

That 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, MGC’s unit price fell more than 40% from its prior closing price of $2.14 in a single day, closing trading at $1.26 per unit. Slater and Gordon and IMF are investigating:

  • Whether Murray Goulburn misled investors in MGC by issuing the FY16 profit forecast in its July 2015 PDS and/or the revised forecast in February 2016, without a reasonable basis;
  • Whether Murray Goulburn breached its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act 2001 (Cth) by failing to announce the FY16 Downgrade, or any part of it, prior to 27 April 2016; and
  • Whether MGC unitholders who acquired units during the Trading Period (including under the July 2015 capital raising) are able to recover losses incurred as a result of the above possible contraventions.

NOTES

This is a tentative settlement only; awaiting Federal Court approval. Please click here for more details on the announcement.

CLASS DEFINITION

On behalf of persons who acquired an interest in fully paid units in the MG Unit Trust (“MGC”) during the period 29 May 2015 to 26 April 2016; and have entered into a litigation funding agreement with IMF Bentham Limited in relation to the proceeding on or before 26 October 2018 and which had not been terminated as of 26 October 2018.

SECURITY ID’S

AU000000MGC1; AU0000MGCXX3; AU0000MGCZZ3; BYR58D4; BYRXT79; BYRXT80; Q6076T104; Q6076T112; Q6076T120

CLASS PERIOD

May 29, 2015 to Apr 26, 2016

SETTLEMENT AMOUNT

AU $42,000,000

COURT

Federal Court of Australia, Victoria District Registry

REGISTRATION DEADLINE

October 26, 2018

LEAD COUNSEL FIRM

Slater & Gordon

LITIGATION FUNDER

IMF Bentham

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