Hundreds of disgruntled investors have registered for a class action against embattled crop-protection group Nufarm, and lawyers say the number of claimants could balloon into thousands, according to a report by Jared Lynch of BusinessDay.com in Australia.
Legal firms Maurice Blackburn and Slater & Gordon have launched two separate actions, which are seeking to recover losses from alleged material non-disclosures.
Nufarm managing director Doug Rathbone is accused of repeatedly misleading investors with optimistic forecasts, they say.
The company has denied any and all allegations of wrongdoing, and said it will “defend the proceedings vigorously.”
Its shares have taken a battering, falling 24.3 per cent since February’s high of $5.73 to $4.34. Last week, 6.5 per cent, or 29¢, was wiped off the stock price.
A Maurice Blackburn spokesman said the firm has been instructed by a range of institutional and retail investors, with hundreds of claimants registered.
“Maurice Blackburn is continuing to see more investors join as we approach the hearing date this month,” the spokesman said.
“We could see thousands of investors come forward.” The Maurice Blackburn claim centers on sales of glyphosate, a main ingredient in Nufarm’s weedkillers, which contributes a third of the company’s revenue.
Maurice Blackburn alleges that Nufarm failed to adequately inform the market of the adverse effect on the profitability of its business of a falling international glyphosate market between September 28, 2009, and August 31, 2010.
Nufarm told the market in September 2009 that 2009 glyphosate write-downs would lead to a profit in 2010. But a loss of $28.4 million in glyphosate stocks between August and December 2009 was not announced until March the following year, the Maurice Blackburn claim alleged.
Slater & Gordon alleges Nufarm “did not have reasonable grounds” for a forecast of an operating profit of $110 million to $130 million for 2009-10, made by Mr. Rathbone at a March 2010 extraordinary general meeting and repeated at Nufarm’s half-year results presentation on March 30, and on April 20, when it raised $250 million in new shares.