Lucent (LU) moved a step closer Friday to closing the books on an ugly chapter in its brief history.
Lucent's agreement to
settle a shareholder lawsuit for $514 million was approved in federal court in Newark, N.J. The settlement stands to be the second-largest investor class-action deal ever, after
$3.5 billion payout. Lucent reached a tentative agreement on the terms of the settlement in March, but denied any wrongdoing.
The struggling telecom equipment giant said Friday that the court's final approval clears the way for a settlement that would involve $113.4 million in cash and some $400 million in stock. Investors who owned the stock between Oct. 26, 1999, and Dec. 20, 2000, will be eligible for a portion of the settlement.
"This is another step in the settlement process and moves us one step closer to resolving a major issue from Lucent's past," Lucent said in a statement.
Though Lucent has put several legal issues behind it, the company isn't entirely out of the woods.
Federal investigators are still looking into the company's business operations in Saudi Arabia. The inquiry follows a lawsuit brought by the National Group for Communications & Computers, which accused Lucent of paying
$15 million in bribes to Ali Al-Johani, a former minister of Saudi Arabia's Ministry of Post Telephone and Telegraph. The group charged that Lucent bribed the official in order to win business. Lucent has said it believed the claims were baseless and is cooperating with Justice Department and the
Securities and Exchange Commission
In March, Lucent agreed to
pay millions of dollars in cash and stock to settle securities-fraud lawsuits stemming from the company's boom-era run-up and subsequent bust. Lucent took a second-quarter charge of $420 million, or 11 cents a share, to pay for the settlement.
The agreement represents the company's latest effort to nail the door shut on an ugly period in its history. Lucent was a stock market favorite under former CEO Rich McGinn in the late 1990s, but as pressure built for the company to hit its earnings numbers, its accounting grew increasingly aggressive, observers have said.
The entire house of cards collapsed in January 2000, when Lucent shocked Wall Street with a massive earnings shortfall that caused the once-hot stock to enter a deep hole from which it has never recovered.
Lucent shares fell 3 cents, or 1%, to close at $2.91 Friday.
Friday's court decision paves the way for a global settlement that consolidated 54 separate lawsuits.
The agreement calls for the payment of $113.4 million in cash, $247 million in additional cash or Lucent shares, and warrants to purchase 200 million shares of Lucent stock at a price of $2.75 per share, $24 million worth of
shares, and as much as $5 million to pay for the cost of administering the settlement.