Ontario Judge Approves Nortel Settlement

Time to turn the page on some of Nortel’s legal woes after Mr. Justice Warren K. Winkler of the Ontario Superior Court of Justice approved an estimated $2.5 billion settlement last weeks that resolves seven lawsuits in the United States, Ontario, Quebec and British Columbia over whether Nortel misled investors during two separate class periods. The decision follows the approval of the settlement in the two U.S. class actions last month by U.S. District Court Judges Richard Berman and Loretta Preska.
Under the settlement, Nortel will pay $575 million in cash and issue common shares representing 14.5% of its current equity, worth approximately $1.7 billion based on its current share value. The settlement also includes $228.5 million in payments from Nortel’s insurers. Nortel has also agreed to contribute one half of any recovery in existing litigation by Nortel against former senior officers (Frank Dunn, Dough Beatty and Michael Gollogly) who were terminated for cause in April 2004.

In approving the settlement, Justice Winkler said the settlement was “fair, reasonable and in the best interests of the class (of Nortel investors)” and provides “the maximum available amount for satisfaction of the claims in total, short of trial”.

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3 Responses to “Ontario Judge Approves Nortel Settlement”

  1. Bill Ritchie Says:

    After further inquiries with Mike Z and discussions with Nortel’s investor Relations, it appears they are NOT going to compensate any shareholder, period.
    Their policy appears to be to ignore all investors who “hung in there” hoping the “old” stock value would come back ’some day!’ Well, forget it, it’s not happening. The reverse split of 1 for 10 put a stop to that–BIG TIME.
    ( It was suggested a contingency fund be created to refund loyal investors who stayed with Nortel on the expectation their stock value would improve under new management. )
    If you did not participate in the two class action settlements that expired on November 20th 2006 then you qualify for this new law suit.
    We need to know how many (pre Dec 1st 2006)shares you hold and at what price you paid for them. If the average paid is below say, $8. then it may not be in your best interest to participate. It’s possible that the stock “might” climb to $80. some day!
    Looking forward to receiving your information–type Nortel 1 for 10 in the subject of your e-mail.
    Thank you, Bill Ritchie.
    cwritchie@cogeco.ca

  2. Dunn's A Crook Says:

    Your story is not correct as to Quebec. The Court in that province has not yet approved the settlement.

  3. aqwer Says:

    Bill,

    At some point, investors have to take responsibility for their actions. If you decided to hang in with Nortel, that is your right, but it does not entitle you to sue Nortel if you lose money. Companies go up and down based on markets, management decisions, competition, and other factors, that is the nature of business. The financial markets are not a sure thing, and continuous lawsuits are not going to make them a sure thing.

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