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Nortel Proposes $2.5-Billion Shareholder Settlement
LONDON Canadian communications equipment maker Nortel will pay $2.5 billion to settle two long-running class-action lawsuits by shareholders in response to an accounting scandal under Nortel’s previous management.
The company said Wednesday (Feb.8) it had agreed in principle to pay $575 million in cash and to issue 629 million shares, representing 14.5 percent of its equity.
Based on Nortel’s closing price of $3.02 on Feb. 6, the share settlement would amount to a charge of $1.9 billion.
The deal, agreed to after mediation, follows Nortel’s announcement of revised financial guidance during 2001 and the revision of its 2003 financial results and restatement of other results.
The proposed deal would be part of, and is subject to, the company reaching a global settlement in all pending and proposed shareholder class-action suits. Nortel said talks were continuing on a global settlement.
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