It’s expected that the 30,000 Telstra shareholders who brought forward the case will divvy up around $3.7 million in compensation. The $1.7 million difference will fund legal and administrative costs, said Slater & Gordon, the law firm acting for the shareholders.
The legal action concerns a briefing that Telstra gave to the Federal Government on August 11, 2005, which was not disclosed to the Australian stock exchange until September 7.
Considering the deal is approved by the Federal Court, Telstra said the payment would represent just 1.7 per cent of the $300 million from the original claim.
If all eligible shareholders participate, then the payment to each would be less than one cent for every share purchased in the period, Telstra said.
Telstra's group general counsel, Will Irving, said that Telstra was approached with a settlement proposal after it provided its evidence to Slater & Gordon, the lawyers representing the class.
"We are very confident about our legal position but frankly, it will be less expensive and time consuming to settle the case than run it. If the settlement is approved the class action against Telstra will be dismissed," Irving said.
"As part of our defence, Telstra's senior executives were ready to give evidence at trial. However it's in the interests of shareholders to accept a settlement that represents a tiny fraction of the claim, and allow our executives to continue to focus on delivering better services to customers and generating greater returns for shareholders.”
The Court today ordered that Slater & Gordon place advertisements in newspapers notifying shareholders who purchased Telstra shares between 11 August 2005 and 6 September 2005 of their rights to object to the proposed settlement.
A further hearing has been scheduled before the Federal Court to consider the settlement on 13 December 2007.
Telstra to cough up $5 million in class action settlement
By Staff Writers on Nov 12, 2007 12:50PM