The shareholders, which include Ontario Teachers’ Pension Plan Board, the state of New Jersey and the administrator of the Ontario Public Service Employees Union (OPSEU) Pension Plan, said they lost money when the Canada-based information technology company revised its financial outlook in 2001 and restated results from 2001 to 2003 to correct accounting errors (See Nortel Lawsuits Go Global).
A Reuters news report said that In the settlement of the two shareholder suits, Nortel agreed to pay $575 million in cash and issue shares equal to about 14.5% of its current outstanding equity, worth more than $1.64 billion based on Nortel’s current stock value.
The terms also call for $265 million in payments from the company’s insurers and half of any money Nortel gets in its lawsuits against its former Chief Executive Frank Dunn and other senior executives ousted as the accounting scandal unraveled, the news service reported.
Even though the settlement gained approval of US District Judges Richard Berman and Loretta Preska for the Southern District of New York, it is still pending approval in several Canadian courts.
Sean Coffey, a lawyer for the Ontario Teachers’ Pension Plan Board, which led one of the lawsuits along with the state of New Jersey, told Reuters that the settlement “represents a significant recovery on the dollar” for the plaintiffs he represents.