Crown Resorts to Pay AU$125M to Settle Class Action
Crown Resorts (ASX: CWN), the prominent Australian gambling operator, has reached an agreement to settle the shareholder class action that was brought against it in December 2017 in the Federal Court of Australia.
Known as Zantran Pty Limited v Crown Resorts Limited, Federal Court Proceeding VID 1317/2017, the total settlement amounts to AU$125 million, including interest and costs.
The class-action lawsuit alleged that Crown had failed to notify shareholders about a marketing campaign in China that led to a decline in the company's share price of close to 14% when 18 of the group's employees were detained in China in 2016.
The class action against Crown was filed in the Federal Court by Maurice Blackburn Lawyers, Australia's leading class action firm. At the time, Andrew Watson, the National Head of Class Actions at Maurice Blackburn, said that the operator had chosen to "roll the dice on its Chinese VIP operations against a backdrop of a known Chinese crackdown on illegal gambling-related activities and that gamble backfired spectacularly."
Crown has released a statement that said the settlement is subject to Federal Court approval and various other conditions. The statement went on to explain:
Crown expects to recover a significant portion of the settlement amount from its insurers but cannot at this stage be certain about the outcome of negotiations with insurers or the outcome of any necessary formal steps for recovery it may need to take. Crown's Board of Directors determined that the agreement to settle the Proceeding was a commercial decision made in the best interests of Crown and its shareholders.