By Andrew Starke
Aristocrat Leisure has announced it will pay $US212 million ($A225.86 million) in damages after a settlement relating to convertible bonds litigation in the United States.
The litigation relates to $US130 million of bonds that were due on May 31, 2006, and has been running since 2004.
Following entry of final judgements by the United States District Court (Southern District New York), a settlement agreement was reached under which neither the company nor the bondholders will appeal any aspect of the case in exchange for a further reduction of the total damages by approximately US$10 million ($A10.65 million).
The final total damages payable by Aristocrat will now be approximately US$212 million and the company said in a statement to the Australian Stock Exchange (ASX) that it is in the process of paying these funds to bondholders.
“In addition, the Company has also reached a settlement with the Trustee of the bonds,” said the statement.
“As a result, the funds held in an account currently maintained under the District Court’s supervision will be returned to the Company. It is expected that the net amount of these funds will be approximately US$9 million, following payment of outstanding amounts owed by the Company to the Trustee.”
The litigation stems from Aristocrat calling for the redemption of the bonds in a notice that purported to terminate the bondholders' conversion rights under an indenture agreement.
In 2005, the US District Court ruled that Aristocrat was in breach of the indenture, finding that the company’s efforts did not constitute an effective call for redemption and the bondholders' conversion rights were not terminated.
Aristocrat Leisure shares were trading at $3.81 at 1pm today (Sep 15), up from $3.70 seven days ago but well down from late 2007 and early 2008 when the company's share price regularly traded at over $10.