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.
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 $11 million 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.
Who is part of the class action?
The class action has been brought on behalf of people who acquired shares in Bellamy’s during the period 14 April 2016 and 9 December 2016 and who, as at 13 September 2017, have entered into a litigation funding agreement with Investor Claim Partner Pty Ltd and ICP Capital Pty Ltd (ICP).
If you are unsure about whether or not you are a part of the class action or have any questions about the class action, please contact ICP on (02) 8039 6100 or BellamyClassAction@icp.net.au.
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 proceeding). Shareholders who have signed a funding agreement/retainer to participate in the McKay proceeding are not part of this proceeding.
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.