A2 Milk could face class action from investors

The company's share price has plunged 75 percent from a record $21.74 in August to a low of $5.42.
The company's share price has plunged 75 percent from a record $21.74 in August to a low of $5.42. Photo credit: Getty Images

A law firm in Australia has confirmed it's investigating a class action lawsuit against specialty dairy company A2 Milk.

The company's share price has fallen dramatically over the last year after the company downgraded its earning forecasts four times, dropping from a record $21.74 in August to a low of $5.42.

On Monday, law firm Slater and Gordon confirmed to Newshub a number of shareholders had "indicated their interest in potential proceedings" against the company, though "no proceedings have yet been filed".

Slater and Gordon class actions principal lawyer Kaitlin Ferris said the company expects more investors will continue to come forward as the investigation is completed.

"A2 Milk gave market guidance in August 2020 which promised strong growth in revenue – subsequently, the company issued four downgrades to revenue and EBITDA margin guidance," Ferris said. 

"Slater and Gordon is investigating whether the information ultimately released by A2 is likely to have been known to the company at an earlier stage, and therefore whether A2 breached its obligations to keep investors informed of material information in a timely manner."

Ferris said the law firm expected to have reached a view about whether there is sufficient basis for a claim to be made in the coming weeks.

In a statement to NZX, A2 Milk said it was aware of media reporting concerning the potential class action but was "not aware of any legal proceedings having been filed at this time".

"The company believes that it has complied with all applicable disclosure obligations and denies any claim to the contrary. The company will respond further if and when any legal proceedings are commenced."