Nortel Networks Corp. (NYSE: NT), the largest North American telephone equipment maker, has announced the preliminary settlement of the securities class actions pending against the company in the S.D.N.Y. The cases are related to Nortel’s announcement of revised financial guidance during 2001 and its revision of its 2003 financial results and restatement of other prior periods.
The proposed settlement is for $2.4 billion in cash and stock. In particular, Nortel has agreed to pay $575 million in cash and issue stock equivalent to 14.5 percent of the company. Nortel also will contribute one-half of any recovery from its existing litigation against certain former officers who were terminated for cause. The agreement is conditioned on payments from existing insurance – an issue that has not yet been resolved.
Bloomberg reports that the proposed settlement is the fifth-largest securities class action settlement in U.S. history.