A2 Milk faces 3rd class action claim over disclosure
A statement of claim has been filed in the Auckland High Court against a2 Milk alleging breaches of the Financial Markets Conduct Act and the Fair Trading Act, following on from two other similar claims launched in Australia.
The opt-in class action seeks compensation for eligible a2 Milk shareholders who allegedly suffered losses as a result of the significant decline in the value of a2 Milk shares between August 19, 2020 and May 9, 2021. The solicitors are Thorn Law and the legal action is being funded by Australianbased
CHC Investment Fund III, a subsidiary of Court House Capital. The claim is separate from a similar class action being taken in Australia.
“In summary, the legal action alleges that as a result of a2 Milk issuing misleading guidance and failing to amend or withdraw that guidance in a timely manner, shareholders were not given accurate information about the company’s ability to meet its revenue and margin forecasts,” Philip Skelton QC said.
A financial institution has already joined the action “on behalf of a significant number of clients”, representing a substantial shareholding in a2 Milk, Skelton said.
“The action claims that because of the inaccurate information given to the market, investors were unable to make informed decisions as to whether to buy, sell or retain a2 Milk shares; many investors lost substantial sums as a result of acting on that misleading information.
“Unless material information is disclosed and forecasts amended to reflect updated assessments, it is reasonable for shareholders, especially those who have invested in a publicly listed company like a2 Milk, to assume that existing forecasts remain valid,” Skelton said.
This month, Australian law firms Slater and Gordon and Shine Lawyers said they had joined forces in their class action against dual-listed a2.
The Australian firms had previously taken separate actions against the company over its earnings disclosures made in 2020 and 2021.
The Australian claim will be considered at a court hearing on May 25.
In a statement to the NZX yesterday, a2 Milk said: “The company considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously defend the proceedings.”
Shares in a2 Milk, which peaked at $21.51 in July 2020, traded on the NZX today at $4.57, down one cent.
In its claim — lodged last year — Slater and Gordon accused a2 of breaching continuous disclosure rules in posting four downgrades on September 28 and December 18 last year, and February 25 and May 10 of this year.
Downgrades by a2 during the August 2020 to May 2021 claim period caught the market by surprise and revealed that a2 had been facing systemic and structural issues with its distribution networks at an early stage of the financial year, Slater and Gordon said.