By Madeleine Heffernan
SIGMA Pharmaceuticals has agreed to pay $57.5 million to end a shareholder class action over its disclosure during the financial crisis.
Analysts were mixed on the news, describing it as ''clearly a disappointment'' for Sigma, a buying opportunity and ''consistent with a pragmatic management approach and desire to 'move on'''.
The settlement brings to an end a two-year battle against law firm Slater & Gordon, which represented 280 retail shareholders, super funds and banks that had purchased Sigma shares between September 7, 2009, and February 25, 2010.
If approved, it will not be an admission of liability by Sigma.
The class action centred on Sigma's forecast for a full-year profit when it raised capital in September 2009. In February 2010, Sigma entered a long trading halt, and at the end of March announced a surprise $389 million net loss, with $424 million in goodwill impairments. The loss prompted an immediate share price slump and sweeping executive departures.
Sigma told shareholders this week the $57 million would be recorded as a material item in its 2013 accounts. It did not expect the settlement to affect its share buyback plan or future dividends, but said it would ''keep this under review''.
Slater & Gordon said the conditional agreement, agreed during Federal Court mediation in Melbourne, was ''great news for participating shareholders''. ''Based on our assessment of investors' claims, group members will recover the vast majority of their losses,'' class action lawyer Ben Hardwick said.
Broker Credit Suisse said the settlement ''removes an overhang on the stock''. But JPMorgan said the deal ''temporarily puts to question the sustainability of its capital management and yield at current levels''.
Sigma shares closed flat yesterday at 65¢, taking its year-to-date gain to 21 per cent.