Nortel and lead plaintiffs reached agreements of settlement in two class actions lawsuits that arose following the company’s announcement of revised financial guidance during 2001, and the company’s revisions of its 2003 financial results and restatement of other prior periods effected during the first half of 2005. As previously announced, the proposed settlement was conditioned, among other things, on the resolution of related Canadian shareholder class actions. Nortel has now also reached agreement with the plaintiffs in those Canadian actions with respect to the global settlement as set forth in the stipulations and agreements of settlement.
Under the terms of the global settlement, subject to certain approvals, Nortel would make a payment of US$575 million in cash, issue 628,667,750 of its common shares (representing approximately 14.5% of its 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.
Nortel noted that it continues to cooperate with the U.S. and Canadian securities regulators and law enforcement authorities in their ongoing investigations relating to the company’s accounting restatements, and the settlement does not relate to these ongoing investigations. http://www.nortel.com
