TORONTO—Nortel Networks Ltd. said its insurers have agreed to put $228.5 million toward Nortel’s settlements for a pair of class-action lawsuits that stemmed from an accounting scandal.
In February, Nortel agreed to pay more than $2.4 billion in cash and stock to settle the shareholder lawsuits. The company said it agreed in principle to pay $575 million in cash and to issue 628.7 million of its stock shares, valued at about $1.9 billion, which, at the time, represented 14.5 percent of the company’s equity.
In a statement, Nortel, said, “the proposed settlement was conditioned, among other things, on the resolution of insurance related issues and Nortel and the lead plaintiffs reaching an agreement on corporate governance related matters. These matters have now been resolved with Nortel’s insurers agreeing to pay $228.5 million toward the settlement and Nortel agreeing with the insurers to certain indemnification obligations. The company believes that these indemnification obligations would be unlikely to materially increase its total cash payment obligations under the proposed settlement. These insurance payments would not reduce the amounts payable by the company.”
Nortel said it plans to continue cooperating with U.S. and Canadian securities regulators and law enforcement authorities on investigations relating to the company’s accounting restatements, but it noted that the proposed settlement did not relate to these ongoing investigations.
Nortel’s stock didn’t seem bothered by the news, trading down 3 cents at $2.91 per share during morning trading.
