CANADA - The C$88bn Ontario Teachers' Pension Plan (OTPP) and several other plaintiffs have agreed in principle on a C$2.75bn settlement with Nortel Networks Corporation regarding two major securities-related class actions.
Those class actions, Nortel I and Nortel II, arose from the disclosure of significant accounting improprieties at Nortel in recent years.
The contingent settlement announced this week settled the securities fraud claims being prosecuted against the company and some of its directors in “Nortel II”, as well as the claims asserted in the earlier “Nortel I” case.
The total consideration Nortel is paying to the two investor classes comprises $660m in cash, plus 14.5% of the company’s current equity (approximately 628 million shares) worth around $2.1bn.
The payment by the Company will be allocated equally between the two investor classes using an allocation formula worked out between the Nortel I and Nortel II lead plaintiffs with the active assistance of Judge Sweet.
OTPP was a court-appointed co-lead plaintiff in the securities class actions, and CEO Claude Lamoureux said: “We pursued this class action on our 250 000 members’ behalf and are pleased with the tentative settlement.”
“We have a fiduciary duty to the active and retired Ontario teachers for whom we invest to press the companies we invest in to deliver shareholder value. As this suit illustrates, we are prepared to act when necessary.”
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