Nortel Networks

Nortel Provides Update on Global Settlement of Shareholder Class Action Litigation

    Toronto, Canada (ots/PRNewswire) -

    - Definitive Settlement Agreement Signed with Lead Plaintiffs; Agreement  Reached With Canadian Plaintiffs

    Nortel(x) (NYSE: NT, TSX: NT) today announced that, as a result of the  continuing discussions in the mediation process with respect to the  previously announced agreement in principle for a proposed settlement of  certain shareholder class action lawsuits with the lead plaintiffs in two  significant class action lawsuits pending in the Southern District of New  York, the Company and the lead plaintiffs have entered into stipulations  and agreements of settlement in the two actions.

    As previously announced, the proposed settlement was conditioned, among  other things, on the resolution of related Canadian shareholder class  actions. Nortel has now also reached agreement with the plaintiffs in those  Canadian actions with respect to the global settlement as set forth in the  stipulations and agreements of settlement.

    These various settlement agreements encompass most pending and proposed  shareholder class actions commenced against the Company and certain other  defendants following the Company's announcement of revised financial  guidance during 2001, and the Company's revisions of its 2003 financial  results and restatement of other prior periods effected during the first  half of 2005.

    As previously announced, under the terms of the global settlement, subject to certain approvals, the Company would make a payment of US$575  million in cash, issue 628,667,750 of its common shares (representing  approximately 14.5% of its equity), and contribute one-half of any recovery  in the existing litigation by Nortel against Messrs. Frank Dunn, Douglas  Beatty and Michael Gollogly, the Company's former senior officers who were  terminated for cause in April 2004. The cash amount bears interest as of  March 23, 2006 at a prescribed rate and was paid into escrow as of June 1,  2006 pending satisfactory completion of all conditions to the settlement. Further, previously announced settlement terms with respect to insurance  and corporate governance related matters remain unchanged. The settlement  contains no admission of wrongdoing by the Company or any of the other  defendants.

    The settlement remains conditioned, among other things, on receipt of  all required court, securities regulatory and stock exchange approvals.  Although settlement agreements have been entered into, at this time, there  can be no assurance that all conditions to such agreements will be satisfied.

    The Company will continue to cooperate fully with the U.S. and Canadian  securities regulators and law enforcement authorities in their ongoing  investigations relating to the Company's accounting restatements, and the  settlement does not relate to these ongoing investigations. The settlement  also does not encompass the previously disclosed related ERISA action, the  previously disclosed pending application in Canada for leave to commence a  derivative action against certain current and former officers and directors  of Nortel, and the previously reported proposed Ontario shareholder class  action against Nortel and certain current and former directors and certain  former officers in respect of the payment of cash bonuses to executives,  officers and employees in 2003 and 2004 under the Nortel Networks Return to  Profitability bonus program.

    About Nortel

    Nortel is a recognized leader in delivering communications capabilities  that enhance the human experience, ignite and power global commerce, and  secure and protect the world's most critical information. Our next- generation technologies, for both service providers and enterprises, span  access and core networks, support multimedia and business-critical  applications, and help eliminate today's barriers to efficiency, speed and  performance by simplifying networks and connecting people with information.  Nortel does business in more than 150 countries. For more information,  visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

    Certain statements in this press release may contain words such as " could", "expects", "may", "anticipates", "believes", "intends", "estimates ", "plans", "envisions", "seeks" and other similar language and are  considered forward-looking statements or information under applicable  securities legislation. These statements are based on Nortel's current  expectations, estimates, forecasts and projections about the operating  environment, economies and markets in which Nortel operates. Further,  actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following (i) risks and uncertainties relating to Nortel's restatements and related matters including: Nortel's most recent restatement and two previous restatements  of its financial statements and related events; the negative impact on  Nortel and NNL of their most recent restatement and delay in filing their  financial statements and related periodic reports; legal judgments, fines,  penalties or settlements, or any substantial regulatory fines or other  penalties or sanctions, related to the ongoing regulatory and criminal  investigations of Nortel in the U.S. and Canada; any significant pending  civil litigation actions not encompassed by Nortel's proposed class action settlement; any substantial cash payment and/or significant dilution of  Nortel's existing equity positions resulting from the finalization and  approval of its proposed class action settlement, or if such proposed class  action settlement is not finalized, any larger settlements or awards of  damages in respect of such class actions; any unsuccessful remediation of  Nortel's material weaknesses in internal control over financial reporting  resulting in an inability to report Nortel's results of operations and  financial condition accurately and in a timely manner; the time required to implement Nortel's remedial measures; Nortel's inability to access, in its  current form, its shelf registration filed with the United States  Securities and Exchange Commission (SEC), and Nortel's below investment  grade credit rating and any further adverse effect on its credit rating due  to Nortel's restatements of its financial statements; any adverse affect on  Nortel's business and market price of its publicly traded securities  arising from continuing negative publicity related to Nortel's restatements ; Nortel's potential inability to attract or retain the personnel necessary  to achieve its business objectives; any breach by Nortel of the continued listing requirements of the NYSE or TSX causing the NYSE and/or the TSX to  commence suspension or delisting procedures; (ii) risks and uncertainties  relating to Nortel's business including: yearly and quarterly fluctuations  of Nortel's operating results; reduced demand and pricing pressures for its  products due to global economic conditions, significant competition,  competitive pricing practice, cautious capital spending by customers,  increased industry consolidation, rapidly changing technologies, evolving  industry standards, frequent new product introductions and short product  life cycles, and other trends and industry characteristics affecting the telecommunications industry; any material and adverse affects on Nortel's  performance if its expectations regarding market demand for particular  products prove to be wrong or because of certain barriers in its efforts to  expand internationally; any reduction in Nortel's operating results and any  related volatility in the market price of its publicly traded securities  arising from any decline in its gross margin, or fluctuations in foreign  currency exchange rates; any negative developments associated with Nortel's  supply contract and contract manufacturing agreements including as a result  of using a sole supplier for key optical networking solutions components,  and any defects or errors in Nortel's current or planned products; any negative impact to Nortel of its failure to achieve its business transformation objectives; additional valuation allowances for all or a  portion of its deferred tax assets; Nortel's failure to protect its  intellectual property rights, or any adverse judgments or settlements  arising out of disputes regarding intellectual property; changes in  regulation of the Internet and/or other aspects of the industry; Nortel's  failure to successfully operate or integrate its strategic acquisitions, or  failure to consummate or succeed with its strategic alliances; any negative  effect of Nortel's failure to evolve adequately its financial and  managerial control and reporting systems and processes, manage and grow its  business, or create an effective risk management strategy; and (iii) risks  and uncertainties relating to Nortel's liquidity, financing arrangements and capital including: the impact of Nortel's most recent restatement and  two previous restatements of its financial statements; any inability of  Nortel to manage cash flow fluctuations to fund working capital  requirements or achieve its business objectives in a timely manner or  obtain additional sources of funding; high levels of debt, limitations on  Nortel capitalizing on business opportunities because of credit facility  covenants, or on obtaining additional secured debt pursuant to the  provisions of  indentures governing certain of Nortel's public debt issues  and the provisions of its credit facilities; any increase of restricted  cash requirements for Nortel if it is unable to secure alternative support  for obligations arising from certain normal course business activities, or  any inability of Nortel's subsidiaries to provide it with sufficient funding; any negative effect to Nortel of the need to make larger defined  benefit plans contributions in the future or exposure to customer credit  risks or inability of customers to fulfill payment obligations under  customer financing arrangements; any negative impact on Nortel's ability to  make future acquisitions, raise capital, issue debt and retain employees  arising from stock price volatility and further declines in the market  price of Nortel's publicly traded securities, or any future share  consolidation resulting in a lower total market capitalization or adverse  effect on the liquidity of Nortel's common shares. For additional information with respect to certain of these and other factors, see Nortel's Annual Report on Form 10- K/A, Quarterly Report on Form 10-Q and  other securities filings with the SEC. Unless otherwise required by  applicable securities laws, Nortel disclaims any intention or obligation to  update or revise any forward-looking statements, whether as a result of new  information, future events or otherwise.

    (x)Nortel, the Nortel logo and the Globemark are trademarks of Nortel  Networks.

ots Originaltext: Nortel Networks
Im Internet recherchierbar: http://www.presseportal.ch

Contact:
For further information: Media - Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Investors - +1-(888)-901-7286,
+1-(905)-863-6049,
investor@nortel.com



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