Federal judges have signed off on an estimated $2.4-billion settlement between Nortel Networks Corp. and its shareholders after the Canadian telecommunications giant revised financial results between 2001 and 2005.
The settlement will be paid out to investors who purchased common stock or sold options of Nortel stock between April 24, 2003, and April 27, 2004, as well as between Oct. 24, 2000, and Feb. 15, 2001.
The filed lawsuit complained of various accounting manipulations, such as inflating revenue from fiber-optic equipment contracts.
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Nortel, North America's largest maker of telephone equipment, will pay approximately $575 million in cash and issue close to 630 million common shares -- about 14.5 percent of its equity to settle the suits. The settlement contains no admission of wrongdoing by eother the company or any of the other defendants, although as part of the agreement, investors will get half of any recovery that Nortel secures in litigation against three former senior officers, including former chief executive Frank Dunn.
Nortel chief executive Mike Zafirovski has already announced plans to cut $1.5 billion in expenses over the next three years as part of a rebuilding effort after a $2.58 billion loss in 2005 and a trio of restatements wreaked havoc on the company's balance sheet.
Courts in Canada must still approve the settlement.
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