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SYDNEY : Australia's Aristocrat Leisure, the world's second-largest gaming machine maker, on Thursday settled the country's biggest shareholder class action for 144.5 million dollars (125.7 US), a court heard.
Around 4,000 shareholders sued, claiming the firm overstated its profits in 2001 and 2002 and issued a subsequent profit forecast that was unattainable, making its share price plunge when the true state of the company was revealed.
Around two billion dollars were wiped from the value of Aristocrat shares when the crisis exploded in 2003.
A Federal Court in Sydney approved the agreement between the gaming giant and Dorajay Pty Ltd, which represented the shareholdings by retail and institutional investors.
Dorajay's lawyers said the payout represented an 0.80 dollar return for every dollar shareholders lost before interest - the highest on record in Australia.
Bernard Murphy, chairman of legal firm Maurice Blackman, told reporters outside the courtroom that Aristocrat engaged in "a serious episode of misconduct."
"It was involved in businesses in South America that weren't travelling the way they hoped, and instead of revealing the true state of its business to the market it chose to fudge," he said.
"When the true state of the company was revealed to the market its share price collapsed and two billion dollars came off its market capitalisation," he said.
Aristocrat's share price dropped from more than five dollars to less than one almost immediately. They have since recovered.
Aristocrat had initially estimated the damages suffered by shareholders at between 10 million and 20 million dollars, but agreed to the settlement in court on Thursday.
The settlement was made up of 136 million dollars in damages and 8.5 million in costs.
Aristocrat on Thursday had more bad news when it announced that its net profit for the first half of 2008 had almost halved to just over 70 million dollars due to an economic slowdown in the United States and Australia.
The company's shares however rose 0.13 cents to 5.72 dollars. - AFP/de
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