Nortel reached an agreement in principle with the lead plaintiffs in two significant class action shareholder lawsuits pending in the Southern District of New York.
Under the proposed settlement, Nortel would make a payment of US$575 million in cash, issue 628,667,750 of its common shares (representing 14.5% of its current equity), and contribute one-half of any recovery in the existing litigation by Nortel against Messrs. Frank Dunn, Douglas Beatty and Michael Gollogly, the company’s former senior officers who were terminated for cause in April 2004. The agreement in principle is also conditioned on the contribution of available insurance, which has yet to be resolved.
“Our intent is to achieve a fair resolution of these lawsuits and avoid a prolonged, uncertain and costly litigation process,” said Harry Pearce, chairman of the Board of Directors, Nortel. “A final settlement would remove a significant impediment to Nortel’s future success and allow Mike Zafirovski and the Nortel team to move forward.”http://www.nortel.com
