Nortel Networks continued to distance itself from a series of accounting scandals as two U.S. federal district court judges approved a $2.45 billion settlement for shareholders, who had sued the networking equipment provider.
The settlement, announced Tuesday, calls for Toronto-based Nortel to pay $575 million in cash and the remainder in Nortel shares currently valued at about $1.65 billion. Another $228.5 million is to come from Nortel's insurers. The stock to be given up in the settlement is equal to about 14.5% of Nortel's outstanding equity. Additional funds could come from pending litigation with former Nortel executives charged with accounting violations.
The settlement announced Tuesday involved two separate class-action suits against Nortel. In one case, Judge Loretta Preska wrote: "The settlement is approved as fair, reasonable and adequate." The other Manhattan-based judge, Richard Berman, also ruled in favor of plaintiffs who had instituted another separate suit.
Additional litigation involving the Nortel accounting scandals remains to be resolved in Canadian courts.