Perpetual grabs 8pc of Aristocrat, wants changesFeb 17Ben Power...

Perpetual grabs 8pc of Aristocrat, wants changes
Feb 17
Ben Power and Damon Kitney

Fund manager Perpetual Trustees has swooped on Aristocrat Leisure, snapping up an 8per cent stake in the embattled poker machine maker and calling for heads to roll following last week's profit warning.

Aristocrat shares plunged 56per cent after warning that full-year results would be one-quarter below market forecasts as a result of a lost South American contract and cost blow-outs at its US operations.

Managing director Des Randall fronts shareholders at tomorrow's annual results, where he is expected to argue that he is the best man to lead a restoration of the once high-flying poker machine maker and reject any suggestion he will quit.

However, Perpetual's head of Australian equities, John Sevior, has demanded management change.

"We'd be looking to push for senior management changes at the company," he said. "In our eyes, replacing the CFO [Lionel Jayaraj] and head of Americas [Mark Newburg] is non-negotiable."

Aristocrat insiders say Mr Newburg, a close associate of Mr Randall's, is expected to take the blame for the disaster.

However, fund managers and analysts say there are few suitable internal and external candidates for Mr Randall's job - meaning he is safe for the time being.

"To be honest, they need him there to fix it up," said John Whiteman, of AMP, which sold down below the 5per cent disclosure threshold last week.

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"I don't really want him to go. Though I'm happy to see some other people go," he said, adding that some senior executives were "living on borrowed time".

"The chief executive relies on information being fed to him," he said. "This business is fixable."

Mr Sevior said: "The core business is very strong."

Aristocrat's market capitalisation has crashed from from $1.9billion to just $830million, and the stock ended last week at just $1.77.


Aristocrat maintains that it was unaware of the full extent of deteriorating margins and cost blow-outs at its US operations. It has launched a full review of its North and South American operations.

Originally it blamed the shortfall on a failed 3000-machine contract in South America, but subsequently revealed lower than expected sales and margins in the US knocked $14million off the bottom line.





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