Nortel (NT) says its insurers agreed to chip in $228.5 million toward shareholder settlements, taking a little financial pressure off the stumbling telecom gearmaker.
The Toronto tech shop says it has agreed to indemnification terms with its insurers and expects no additional obligations that have not been covered by cash already set aside for the settlements.
Last month, Nortel agreed to pay $2.5 billion in cash and stock in a bid to settle class-action lawsuits brought in the wake of the networker's
financial scandals of recent years.
said it will pay $575 million in cash and issue 629 million shares, representing a 14.5% stake in the company, to settle the suits. The agreement was reached with the lead plaintiffs in two significant lawsuits pending in the southern district of New York and based on the recommendation of a senior federal judge, following a mediation process.
Just when investors started to hope the networking supplier was getting back on track with its new management headed by former Motorola exec Mike Zafirovski, Nortel announced last week yet another round of restatements. The latest accounting setback raised renewed concerns that Nortel was being stretched a little thin financially.
The company faces $575 million in settlements, undetermined fines and legal fees and about $1.5 billion in debt coming due within a year.
Nortel shares were down 3 cents, to $2.91, in midmorning trading Friday.