The media in their usual negative way have put it about that ALL...

The media in their usual negative way have put it about that ALL face a $200m plus damages claim by way of a class action suite. Shareholders and potential investors are naturally quite concerned about such a huge liability overhanging the company, but is it necessary to be so concerned.

IMO judgment will be in ALL's favour if the matter goes to trial but history suggests the matter can and will be settled before that. The question is how much can the claim be settled for and guidance for that can be taken from the recent AMP GIO class action which began when shareholders lost billions of dollars after AMP tookover GIO.

Approx one third of GIO's 68,000 shareholders i.e. 21,142 participated in the class action and they ultimately shared $97m with another $15m going in costs. On an average basis, each participating GIO shareholder got about $4,600 which isn't very much, and it can be assumed a similar small payout would settle the Aristocrat case.

Using the same ratios as in the AMP case I suggest that no more than about 4,500 of ALL's 13,000 shareholders will sign up for the action. If ALL agree to pay $4,600 per claiment then it will cost about $21m to settle the class action and some of that will be covered by directors liability insurance.

As I said before, I don't think ALL will loose if the case goes to trial but in order to get the matter out of the way ALL might decide to settle. I don't think ALL will have to pay as much as $21m because AMP had a much weaker case. IMO ALL will settle the case for about $10m.