Bellamy’s class action eyed as Maurice Blackburn invites claims

Maurice Blackburn is inviting claims as traders sweat on the infant milk group’s trading suspension.

Bellamy’s CEO Laura McBain.

Troubled infant milk group Bellamy’s could soon be hit with a class action as controversy lingers around its most recent trading update, which wiped 42 per cent from its value on December 2.

News of the potential class action, to be led by Maurice Blackburn, comes as the group entered a trading suspension today as it failed to produce a further trading update as planned.

The under-pressure group (BAL) delivered a shock revenue warning on December 2 that encouraged an informal ASIC probe, and then stunned onlookers by entering a trading halt on Monday pending further details on the impact of trading conditions on its forecasts.

It was due to release those details this morning, but has instead extended its trading suspension until next Wednesday.

“The suspension is necessary for the company to manage its continuous disclosure obligations whilst it continues with a review in order to finalise an updated announcement of the impact of trading conditions on the company’s expected financial results,” a brief statement read.

As traders sweat on the outcome, lawyers are preparing for a multi-million dollar suit, with Maurice Blackburn looking for disgruntled investors to register their details in advance of the possible claim being lodged.

“Maurice Blackburn … is investigating a claim against Bellamy’s Australia for alleged breaches of its continuous disclosure obligations and for allegedly engaging in misleading or deceptive conduct regarding its infant formula trade with China,” the law firm said.

“There is good reason to suspect that Bellamy’s knew or ought to have known about its poor performance and the expected impact of the regulatory changes much earlier than when it ultimately informed the market.

“Our investigations will consider whether Bellamy’s breached its continuous disclosure obligations, engaged in misleading or deceptive conduct, or made misleading statements, in contravention of the Corporations Act and the ASX Listing Rules.”

Investors who bought shares between April 14 and December 1 this year are invited by the law firm to participate.

It comes as the former market darling quickly falls out of traders’ good graces.

The group listed successfully at $1 a share in August 2014, riding the Chinese boom through to a peak of $16.50 late last year.

Up until last month its shares still traded above $12 a share, but sentiment was pummelled as it cautioned on flat revenues for the year, a major blow for a high-growth stock, particularly given market expectations for sales growth of 40 per cent.

The situation has not been helped by an August disposal of shares by suddenly under-pressure chief executive Laura McBain and chairman Rob Woolley.

Just two weeks after an upbeat full-year report, Ms McBain shed $2.4 million worth of stock on August 29, the same time as Mr Woolley divested $2.9m worth at a strike price above $14.

The company then remained relatively positive on conditions through its annual general meeting in October before surprising the market almost two weeks ago.

Ms McBain and Mr Woolley also got rid of a combined $5.8m worth of shares in March when Bellamy’s shares were valued around $10.50.

The company’s two biggest names have been lauded throughout Bellamy’s good times, but started to meet pushback at the October AGM as investors issued a first strike on the company’s remuneration report.

Mr Woolley, who has served as chairman since 2007, said at the time the company had rapidly raised Ms McBain’s salary and put forward new long-term incentives in a bid to guarantee her retention.

This week’s halt is only likely to further upset investors, while a second profit downgrade would be expected to savage the share price and intensify the spotlight Ms McBain and Mr Woolley.

Bellamy’s shares last traded at $6.68.

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