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Nortel Reaches Tentative Settlement in Shareholder Lawsuit

5:30 am on February 9, 2006 | Category: Business, Law

Telecom-equipment manufacturer, Nortel Networks said yesterday that it has reached a tentative settlement agreement with the plaintiffs in two class-action shareholder lawsuits over the companyâ€™s accounting scandal.

Nortal has said that it wants to avoid ongoing litigation over the scandal, which involved the falsification of financial expectations for the 2001 fiscal year.

The proposed settlement has a total value of $2.47 billion, including $575 million in cash and 628.7 million shares. The company will also contribute half of any funds that it recovers through legal action against former executives involved in the scandal.

â€œOur intent is to achieve a fair resolution of these lawsuits and avoid a prolonged, uncertain and costly litigation process,â€ said Nortel Chairman, Harry Pearce in a statement.

Despite the apparent cooperation, there is still no guarantee that this settlement will go ahead. In order to become definitive, both parties will need to agree on corporate governance and insurance-related issues and court, regulatory, and stock exchange approvals must be obtained.

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