Bellamy’s Australia is facing a potential class action lawsuit from legal giant Maurice Blackburn, with two other firms also considering taking action on behalf of angry shareholders.
Maurice Blackburn is investigating alleged breaches of Bellamy’s continuous disclosure obligations and for allegedly engaging in misleading or deceptive conduct regarding its infant formula trade with China.
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.
The legal giant says investors who purchased shares in Bellamy’s between Thursday April 14, 2016 and Thursday, December 1 2016, may be eligible to participate in the proposed class action.
Launceston-based Bellamy’s Australia has voluntarily suspended trading of shares for up to a week, leaving investors uncertain and unable to sell their stock.
The organic infant formula producer told the ASX the suspension was necessary while the company continued its review into “the impact trading conditions had on its expected financial results”.
A two-day trade halt was issued for Bellamy’s securities on Monday and the company has requested the suspension run until it releases an announcement or normal trading begins on December 21.
Under ASX listing rules, a voluntary suspension means no trading in the stock can take place and all existing buy and sell orders are purged.
It follows a tumultuous fortnight for the organic group, which had half a billion dollars wiped off its value on Friday, December 2.
A sell-off was sparked after Bellamy’s revealed weaker sales in China due to regulatory changes. It saw the price of shares plummet more than 40 per cent in a single day’s trade, from $12.09 to $6.56. The company listed on the ASX in August 2014 and at its peak in December 2015 traded at $16.50.
Managing director and chief executive Laura McBain and chairman Rob Woolley both sold shares in Bellamy’s Australia in mid-March for a combined total of $5.76 million.
Ms McBain sold 400,000 shares at $10.49 totaling nearly $4.2 million, while Mr Woolley sold 150,000 shares at $10.44 each, worth close to $1.57 million. Bellamy’s was contacted for comment.
The pair also sold shares in August, worth a combined $5.32 million.
Ms McBain sold 165,000 shares at $14.547 each for a total of slightly more than $2.4 million.
Mr Woolley sold 200,000 Bellamy’s shares at $14.60 each, raising $2.92 million.
The on-market trades were made on August 24, 25 and 26.