EMBATTLED dairy processor Murray Goulburn has admitted to breaking the law after its dramatic farmgate milk price drop last year.
It has reached an agreement with corporate watchdog Australian Securities and Investments Commission (ASIC) for failing to meet its disclosure requirements in the lead-up to the sudden price cut paid to its farm suppliers in April 2016.
MG has agreed to a $650,000 fine and a declaration of one contravention of continuous disclosure provisions of the Corporations Act.
The settlement requires Federal Court approval.
MG chairman John Spark welcomed the conclusion of ASIC’s investigation.
“Murray Goulburn takes its disclosure obligations very seriously and has cooperated fully with ASIC during its investigation of these matters,’’ he said.
‘‘We consider that this settlement is in the best interests of Murray Goulburn as we continue to focus on our objective of supporting our farmer suppliers, including through the proposed Saputo sale process.”
After months of speculation the fate of MG was determined last month when the co-op accepted a $1.31 billion deal from Canadian company Saputo.
The deal includes a 40 cent step up per kilo of milk solids and an additional 40 cent per kg milk loyalty payment for milk supplied for the 2018 financial year.
Shares have an estimated value of $1.10-$1.15 per share/unit.
In a letter to suppliers dated October 27, MG stated securing a sustainable future for remaining loyal suppliers was of great importance to the board.
As stated in MG’s October announcement, if the Saputo transaction is completed, MG will retain part of the transaction proceeds to ensure MG is able to manage appropriately any potential exposure under the ASIC and Australian Competition and Consumer Commission regulatory actions and class action.
The settlement, which is subject to court approval, would assist to clarify MG’s exposure in relation to the ASIC investigation, which is only one aspect of the potential exposures.
Victoria’s peak dairy farmer group is hopeful the deal will help repair confidence in the industry after a tempestuous two years.
The United Dairyfarmers of Victoria said it acknowledged the sale but was disappointed at the loss of the largest farmer-owned co-operative and wants to support members and long-term suppliers of MG through this difficult time.
“This agreement between Murray Goulburn and Saputo provides the industry with some clarity and a path forward to repair trust and transparency in our sector,’’ president Adam Jenkins said.
“The Murray Goulburn board has ensured the deal will be the best step forward for both suppliers and industry, but it is nevertheless upsetting that we have ended up here and we feel for long-term supporters of MG who feel gutted at losing the Australian co-op”.