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Class action against Nufarm
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Class action against Nufarm

Slater & Gordon confirmed today (3 September) that is was approached by the shareholders of crop protection company Nufarm, after the company halved its underlying net profit guidance in…

Slater & Gordon confirmed today (3 September) that is was approached by the shareholders of crop protection company Nufarm, after the company halved its underlying net profit guidance in July this year.

Following an investigation, Slater & Gordon is expected to launch a class action on behalf of shareholders that acquired Nufarm shares between 2 March 2010 and 14 July 2010.

The proposed action will allege that Nufarm engaged in misleading or deceptive conduct when it provided its profit guidance on 2 March 2010 and breached its continuous disclosure obligations throughout the period.

According to Slater & Gordon senior associate Ben Phi, on 14 July 2010 Nufarm downgraded its guidance for the full year ending 31 July 2010 by 50 per cent from an operating net profit after tax of $110-$130 million to a range of $55-$65 million.

"Institutional investors expressed serious concerns when Nufarm halved its full-year operating profit guidance on 14 July 2010," Phi said. "The guidance had been confirmed on numerous occasions since the beginning of March, including in late April when the company raised $250 million from its current shareholders under an entitlement offer."

Phi said the share price "reacted savagely" to the profit downgrade, falling 35 per cent in the immediate aftermath.

"Nufarm has sought to blame its downgrade on poor weather in North America and Europe, as well as the depressed pricing for glyphosate-based herbicide," he said. "We have concluded that these are matters that Nufarm's management was or ought to have been aware of at the time it provided its profit guidance on 2 March 2010."

Phi said the proposed class action had received strong support from institutional investors, but "mum and dad" investors would be expected to join.

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