Investors in former diary giant Murray Goulburn have won a $42 million class action.
The dairy cooperative reached a conditional agreement with legal firm Slater and Gordon to pay out 1300 Australian and international investors who lost money when the unit price collapsed in April 2016.
Under the proposed agreement the Murray Goulburn entities will pay a total of $42 million, inclusive of legal fees and interest, to settle the claims of the Endeavour River class action group members, pending Federal Court approval.
A statement from Murray Goulburn said about 80 per cent of the settlement was funded by insurance.
"MG will contribute the remaining portion of the settlement amount and intends to recover this amount from an insurer third party," the statement said.
MG said the settlement was a "commercial decision made in the best interests of MG shareholders and unit holders in the MG Unit Trust".
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The action was in relation to investments made in Murray Goulburn's listed entity MG Unit Trust from May 29, 2015 to April 26, 2016, including those who replied to an initial public offering in 2015.
Slater and Gordon argued the firm misled investors with profit forecasts and failed to meet market disclosure duties by not announcing a downgrade in 2016.
The proposed settlement was reached ahead of a four-week trial which was scheduled to commence in February 2020.
Slater and Gordon practice group leader Emma Pelka-Caven said the settlement is an "outstanding outcome".
"If approved will be a significant recovery of our clients' losses," she said.
The lead plaintiff Endeavour River director Rod Gibson said "at one stage our investments seemed lost".
"For the plaintiffs to recoup such a significant proportion of their losses is an excellent result," he said.
"It is a tribute to the initiative and efforts of our solicitors and litigation funder."
Slater and Gordon could not confirm how many investors affected were in the North East.
Murray Goulburn still has one pending class action known as the Webster class action.
A Murray Goulburn statement to the ASX said no resolution was achieved during mediation in May.
"A further court ordered mediation is due to occur on or before November 8 and the trial remains listed to commence of February 5," the statement said.
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