Maurice Blackburn, Australia’s leading class action firm, has filed a class action against Bellamy’s Australia Limited (ASX:BAL) (Bellamy’s), in the Federal Court of Australia on behalf of the lead applicant, Peter Basil, (Basil v Bellamy’s Australia Limited FCA VID213/2017) for alleged breaches of its continuous disclosure obligations and for allegedly engaging in misleading or deceptive conduct regarding the growth prospects of the company and its infant formula trade.
When Bellamy’s informed the market of its lower than expected revenue on 2 December last year, the share price almost halved in a single day and its market capitalisation was slashed by over $500 million in the two trading days that followed.
If you purchased shares in Bellamy’s between Thursday 14 April 2016 and Friday 9 December 2016 (Claim Period), you may be entitled to participate in the class action and to compensation if the class action is successful.
What is the Bellamy’s class action about?
Bellamy’s is an Australian producer and supplier of organic baby food and baby formula.
On 2 December 2016, Bellamy’s shocked the market with its announcement that its anticipated revenue for FY17 would be around $240 million, significantly lower than the $350 million that many analysts had predicted. A major reason for the lower than expected revenue was because of regulatory changes in China, which had resulted in lower than expected sales and an oversupply of infant formula.
After the announcement, Bellamy’s share price declined substantially. On 2 December 2016, Bellamy’s shares opened at $12.09 and closed at $6.85, a fall of approximately 43.34%. Bellamy’s shares were placed in a trading halt until 11 January 2017.
On 11 January 2017, while the shares were still in a trading halt, Bellamy’s provided a further market update which disclosed that because of lower than expected demand for Bellamy’s infant formula products it was required to make ‘shortfall payments’ to its key suppliers, where minimum volume commitments under manufacturing contracts had not been met, estimated to be $11million to $13 million per year.
Once the shares resumed trading on 11 January 2017 the share value fell again to $5.35. On 12 January 2017, Bellamy’s shares fell a further 17.76% to $4.40.
Figure 1 – Bellamy’s Share Price Chart
The class action alleges that Bellamy’s knew or ought to have known about its poor performance and the expected impact of the regulatory changes in China much earlier than when it ultimately informed the market. The class action alleges that Bellamy’s breached its continuous disclosure obligations, engaged in misleading or deceptive conduct, or made misleading statements, in contravention of the Corporations Act 2001 (Cth) and the ASX Listing Rules.
If Bellamy’s knew, or ought to have known, about the expected impact of the regulatory changes in China and failed to provide adequate, timely disclosure of this information then investors who bought ordinary shares of Bellamy’s during the Claim Period may have paid an inflated price for Bellamy’s shares and be entitled to compensation.
Funding and representation
Those who wish to actively participate in the class action and be notified regarding progress are requested to register their interest and enter into a retainer with Maurice Blackburn and a funding agreement with litigation funder Investor Claim Partner Pty Ltd and ICP Capital Pty Ltd (ICP). There is no personal cost risk associated with registering and participating in the class action. Costs will only become payable from any class compensation if the class action is successful.
You may register your interest at www.icp.net.au/register-bellamy-class-action. Registration closes on 17 March 2017.
There is another class action which has been filed against Bellamy’s called McKay Super Solutions Pty Limited (as Trustee for the McKay Super Solutions Fund) v Bellamy’s Australia Limited VID163/2017.) (McKay Super proceeding). Shareholders who have already signed a funding agreement/retainer to participate in the McKay Super proceeding may not be entitled to participate as a class member of this class action. If you are unsure of your position or require further information, please email BellamyClassAction@icp.net.au or call us on (02) 8039 6100.
Maurice Blackburn’s class action record is second to none
Maurice Blackburn has Australia’s largest and most successful class actions practice, having recovered more than $2.4 billion for clients since the establishment of our class actions department in 1998.
We have run the nation’s largest class actions and secured the biggest recoveries in Australian class action history, including being the only Australian firm to have secured shareholder class action settlements in excess of $100 million, which we have done five times now.
We continue to conduct various shareholder class actions in line with our aims to provide greater access to justice and enforce Australia’s corporate governance standards.