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UPDATE 1-Aristocrat says no class action settlement yet
May 7, 2008 / 12:40 AM / in 9 years

UPDATE 1-Aristocrat says no class action settlement yet

(Adds detail, background)

MELBOURNE, May 7 (Reuters) - Australia’s Aristocrat Leisure Ltd (ALL.AX), the world’s No. 2 slot machine maker, said it had yet to settle a class action suit brought by shareholders who said it did not accurately update the market on its earnings outlook.

Responding to a report in the Australian Financial Review (AFR) paper that it was poised to settle the A$396 million ($377 million) class action, Aristocrat said negotiations were ongoing and any settlement depended on a number of matters, including gaining court approval.

“Based on current negotiations, it is Aristocrat’s expectation that the settlement will not impact on the company’s operational and strategic objectives or its financial strength or capital management policy,” Aristocrat said in a statement.

The case stemmed from downgrades to Aristocrat’s profit forecasts in 2003, which sparked a 75 percent share price slide.

It was the first shareholder class action tied to continuous disclosure obligations to go to trial in Australia, and could bolster other class actions against companies whose shares crashed late last year, the AFR said.

Without citing sources, the paper had reported a settlement was still being negotiated with the shareholders’ law firm, Maurice Blackburn, but it was believed Aristocrat would pay a large proportion of the damages claimed.

Litigation funder IMF Ltd (IMF.AX) also said in a statement that confidential settlement discussions were taking place, and it would provide further guidance to the market if and when a conditional settlement occurs.

Shares in Aristocrat were down 1.9 percent at A$7.26 by 0024 GMT on Wednesday, against a 0.45 percent gain in the benchmark index .

The stock tumbled last week after it forecast earnings growth well below target this year, adding to more bad news for the Australian gaming sector, which has taken a hammering in recent weeks with smoking bans in gaming venues and regulatory changes expected to crimp profits.

Shares in IMF, which the AFR said stands to benefit from any payout, jumped 14.7 percent to A$0.78. ($1=A$1.05) (Reporting by Sonali Paul and Ben Wilson; Editing by James Thornhill)

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