Sigma is set to commence legal proceedings against the My Chemist/Chemist Warehouse group
Sigma Healthcare Limited said in a statement today that it has been in ongoing discussions relating to the operation of certain aspects of the current supply agreement with the group.
It says that My Chemist/Chemist Warehouse rejected offers of mediation and binding arbitration which had been proposed during these discussions.
“As a satisfactory resolution has not been reached, Sigma has now decided to commence legal proceedings against MC/CW,” says Sigma.
These proposed proceedings relate to the My Chemist/Chemist Warehouse group’s stated intention to acquire certain products from an alternate CSO Wholesaler.
Sigma maintains that under the existing agreement, My Chemist/Chemist Warehouse is not entitled to do this.
“Remedies to be sought by Sigma include declarations and injunctions for specific performance of the agreement,” Sigma says.
“If MC/CW acts in accordance with their stated intention, the impact on Sigma’s EBIT is expected to be approximately $5m – $10m per annum.
“While Sigma remains confident of its position, this action, combined with a continuation of the subdued start to the financial year, may mean that current year underlying EBIT could be up to 5% below FY2016/7 (subject to the outcome of the proposed proceedings).
“Ongoing legal costs will also impact earnings.”
Sigma says it values the relationship with the My Chemist/Chemist Warehouse group and will continue to provide operational support to it in accordance with the terms of the current Supply Agreement, which runs until June 2019.