Nortel Nears $2 Billion Settlement
Posted February 8, 2006 4:55 a.m. EST
NEW YORK — Telecom-equipment maker Nortel Networks says it has reached a tentative agreement to pay nearly $2.5 billion in cash and stock to settle two shareholder class-action lawsuits arising from an accounting scandal.
Nortel has been working to recover from the scandal that forced it to restate previous financial results and terminate several senior executives. It says it wants avoid being tied up in prolonged litigation. Shareholders filed numerous lawsuits against Nortel for allegedly violating U-S and Canadian securities laws after it issued revised financial expectations for the 2001 fiscal year.
Under the proposed settlement, Nortel says it would pay $575 million in cash, issue nearly 629 million shares, or 14 percent of current equity, and contribute half of any funds it recovers from suits against former senior officers fired in 2004.
Around 3,000 people work for Nortel in the Research Triangle Park.