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Aristocrat to appeal court decision on convertible call, expects resolution will take 'a number of years'
New York, May 30 - Aristocrat Leisure Ltd. said it plans to appeal part of a new court decision over the redemption of its 5% convertible subordinated bonds due 2006 on Dec. 20, 2004, and added that the appeal process is expected to take "a number of years to complete."
Meanwhile, the company said that it had offered without prejudice to repay the $130 million principal amount of the convertibles at their maturity on May 31, 2006 but the bondholders had refused - although Aristocrat noted that this was before the latest court decision.
In a ruling on Tuesday, the U.S. District Court for the Southern District of New York granted the bondholders' motion for summary judgment in a declaration that Aristocrat was in breach of its obligations to deliver shares to the bondholders, except for one investor.
The court denied the bondholders' motion that they are entitled to newly issued stock and dividends.
It also ordered that the statutory pre-judgment interest rate of 9% be applied to damages.
Aristocrat said it intends to appeal the order to the extent that it is adverse to its interests.
The Sydney, Australia, gaming equipment and software company announced the call in December 2004 and said at the time it expected a court battle before the securities could actually be redeemed.
At the time, Aristocrat noted that its stock has met the condition for the call, that it trade above 140% of the conversion price for more than 20 out of 30 trading days. The call terminates the holders' right to convert the bonds.
However, the company said the bond indenture contains what it considers to be an error in the form of a transposed exchange rate which, it said, "prejudices the rights of both Aristocrat and the bondholders."
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