Carnegie International Corp. has agreed to pay $5.25 million in cash and warrants to settle shareholders' lawsuits filed after the company's earnings reports were questioned by government regulators.
Carnegie, a telecommunications holding company based in Hunt Valley, will pay $2.25 million to the shareholders and offered $3 million in warrants for Carnegie stock that can be exercised at $3. Shareholders will also receive a 3 percent stake in the company's $2.1 billion lawsuit against its former accounting firm, Grant Thornton LLP.
Carnegie filled its lawsuit in Baltimore City Circuit Court in May, accusing Grant Thornton of making errors that led the company to restate its earnings in 1998.
"Carnegie's board, senior management team, employees and our shareholders are glad to put this chapter behind us and move forward, especially with our corporate coffers intact," Chairman David E. Gable said yesterday.
The regulator's questions arose after the company filed a document with the Securities and Exchange Commission in preparation to begin trading its stock on the American Stock Exchange.
The company's stock traded for one day before the SEC expressed concern about how certain acquisitions in 1997 and 1998 were made. The exchange halted trading as a result.
The shares are traded over the counter for less than a dollar. In a letter to shareholders in May, Gable said the company would apply for listing on a national exchange again in coming months.
Gable also said in his statement yesterday that the settlement would allow the company to return its focus to the business. Carnegie is an Internet support and telecommunications holding company specializing in telecom products, services and distribution and e-commerce.
No one at Carnegie International was available for comment yesterday.