Nortel may settle 2 class actions

AP is reporting that Nortel Networks has reached a tentative settlement deal:

Telecom-equipment maker Nortel Networks Corp. said Wednesday it has reached a tentative agreement to pay $2.47 billion in cash and stock to settle two shareholder class-action lawsuits over the company’s accounting scandal.

Nortel, which has been working to recover from the scandal that forced it to restate previous financial results and terminate several senior executives, said it wants avoid being tied up in prolonged litigation. Shareholders filed numerous lawsuits against Nortel for allegedly violating U.S. and Canadian securities laws after it issued revised financial expectations for the 2001 fiscal year.

Under the proposed settlement, Nortel said it would pay $575 million in cash, issue 628.7 million shares, or 14.5 percent of its current equity, and contribute half of any funds it recovers from suits against former senior officers whom the company fired in April 2004.

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