Sigma Pharmaceuticals Ltd says it has been advised of a possible shareholder class action relating to alleged non-disclosure over a September 2009 capital raising. If the legal proceedings are issued, Sigma said it will "vigorously defend them". Sigma said the amount claimed has not been quantified. "Sigma advises that it has received correspondence foreshadowing a proposed representative proceeding (shareholder class action) against Sigma relating to alleged non-disclosure by Sigma prior to its capital raising in September 2009," the company said in a statement.

In September and October 2009, Sigma completed a $297 million capital raising to fund the acquisition of some pharmaceutical brands and a manufacturing facility. Sigma also reported a first-half profit of $32.2 million. However, in March this year Sigma announced that it was suffering lower cash flows as the company was forced to heavily discount generic drugs. Shares in the drugs maker dropped 48 per cent, from 90 cents to 46.5 cents, on March 31 this year after the company reported a $389.04 million full-year loss following a significant writedown on the goodwill of its generic drug business.

A non-cash impairment of goodwill of $424.23 million, due to a $375.1 million writedown on the Arrow generics business, and a $49.1 million writedown on the Herron brand, were the drivers of the annual loss. Sigma makes and markets its own branded drugs and manufactures drugs under contract. It supplies drugs and provides retail services to pharmacies under the Amcal, Amcal Max and Guardian banners. Sigma's over-the-counter product brands include Herron and Chemists' Own.

Last month, South Africa's Aspen Pharmacare said it will buy Sigma's drugs unit for $US804 million in cash to gain about a quarter of Australia's generic market. Sigma's share price closed down 2.06 per cent to 47.5 cents, 59 per cent lower than on September 4, 2009.

Reuters/AAP