Nortel’s insurers pay millions for settlement

Insurers for Nortel Networks Corp. will pay CD$228.5 million toward a proposed shareholder lawsuit settlement.

In February, Toronto-based Nortel said it would settle with payments of CD$575 million cash from reserves and issue CD$628.7 million common shares. The Ontario-based company also said it would contribute half of any recovered funds relating to lawsuits against former senior officers.

In total, Nortel has agreed to pay CD$2.47 billion in order to settle two class action suits related to the bookkeeping scandal.

The CD$228.5 million in new funds recently allocated toward a settlement will be paid in cash reserves, increasing the cash payment to CD$803.5 million.

This settlement is based upon a number of conditions, including corporate government improvements and an agreement with insurers to indemnification obligations.

The CD$228.5 million insurance payment will not be used to reduce the figure that Nortel must pay under the settlement.

Currently, a final settlement agreement has not been reached.