Aristocrat Bondholders in Convertible Bond Litigation Victory

Cleary Gottlieb won a decision for substantially all of the holders of $130 million of Aristocrat Leisure Limited convertible bonds. Aristocrat Leisure brought a declaratory judgment action contending that because the Indenture for its convertible bonds specified that conversion rights terminate upon a call for redemption, its notice of redemption was effective to cut off the bondholders’ very valuable conversion rights. The Court agreed with the bondholders that giving notice of redemption is not the same as calling for redemption and held that a call for redemption is a process that is not completed until the bonds are redeemed.

Aristocrat Leisure Limited, an Australian company, is a leading manufacturer of gaming equipment.