Tyco To Settle Class-Action Suits for Nearly $3 Billion
Diversified manufacturer Tyco International said on Tuesday it agreed to take a $2.975 billion charge to settle most class-action lawsuits involving the stock and the former management, including former Chief Executive Dennis Kozlowski.
The company, which plans to split into three companies in coming weeks, said it will establish in the near term a settlement fund for payment of plaintiffs' claims in the consolidated class-action cases. The settlement must still receive court approval.
"We are taking an important step to resolve our most significant remaining legacy legal matter," Tyco Chief Executive Ed Breen said in a statement.
"Our balance sheet and cash flow remain strong and will allow us to readily absorb these costs while removing much of the uncertainty around legacy legal matters," he added.
The settlement deals with a complaint filed in early 2003 on behalf of Tyco shareholders from December 1999 to June 2002.
The company, which plans to spin off its health care and electronics divisions into independent publicly traded companies by the end of June, will take the charge in the current quarter.
Tyco, incorporated in Bermuda but with headquarters in New Jersey, announced its break-up plan -- which will cost up to $1.6 billion -- in January 2006. Its previous CEO, Kozlowski, who is serving a prison sentence for looting the company, also floated a break-up plan shortly before Tyco became mired in scandal.