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Computer Associates settling lawsuits, issuing shares
Islandia (New York), Aug 26: Computer Associates said it had agreed to settle three outstanding lawsuits related to claims involving its accounting procedures.
Islandia (New York), Aug 26: Computer Associates said it had agreed to settle three outstanding lawsuits related to claims involving its accounting procedures.
Under the terms of the settlement, Computer Associates said yesterday it would issue up to 5.7 million shares of common stock to shareholders in three class action lawsuits. Plaintiffs' attorney fees will be covered by the stock issuance.
Computer Associates, which makes software for corporate mainframe computers, said it planned to take a pretax charge in the current quarter of about USD 144 million.
The charge is based on the company's USD 25 closing price on the New York Stock Exchange on Friday and administrative costs associated with the settlement.
The after-tax impact of the charge is estimated at USD 97 million, or 17 cents a share.
If the company's share price is below USD 23.43 per share at the time of distribution, up to 2.2 million of the 5.7 million shares would be payable in cash at that price – or a maximum of USD 51.5 million in cash. If that happens, the stock portion of the settlement would be reduced to no less than 3.5 million shares.
Melvyn Weiss, an attorney whose firm is co-lead counsel in one of the consolidated suits, said the case appeared to be protracted.
"We felt that getting stock today, if the company has a good future, had a better upside for our clients than waiting three, four, or five years to resolve this case," he told the Wall Street Journal.
Bureau Report
Under the terms of the settlement, Computer Associates said yesterday it would issue up to 5.7 million shares of common stock to shareholders in three class action lawsuits. Plaintiffs' attorney fees will be covered by the stock issuance.
Computer Associates, which makes software for corporate mainframe computers, said it planned to take a pretax charge in the current quarter of about USD 144 million.
The charge is based on the company's USD 25 closing price on the New York Stock Exchange on Friday and administrative costs associated with the settlement.
The after-tax impact of the charge is estimated at USD 97 million, or 17 cents a share.
If the company's share price is below USD 23.43 per share at the time of distribution, up to 2.2 million of the 5.7 million shares would be payable in cash at that price – or a maximum of USD 51.5 million in cash. If that happens, the stock portion of the settlement would be reduced to no less than 3.5 million shares.
Melvyn Weiss, an attorney whose firm is co-lead counsel in one of the consolidated suits, said the case appeared to be protracted.
"We felt that getting stock today, if the company has a good future, had a better upside for our clients than waiting three, four, or five years to resolve this case," he told the Wall Street Journal.
Bureau Report