Knobias Clip Report (10-24-2008) HLS
Submitted By Knobias ClipReport
HLS: Litigation Settlement Agreement w/UBS Securities
By Fain Hughes, fhughes@knobias.com
HealthSouth Corporation (HLS) announced that the Company and derivative stockholder plaintiffs have reached an agreement in principle with UBS Securities, LLC and UBS AG, Stamford Branch (together, “UBS”), as well as UBS’s insurance carriers, to settle litigation filed by the derivative plaintiffs on the Company’s behalf, captioned Tucker v. Scrushy, in the Circuit Court of Jefferson County, Alabama. This settlement agreement relates only to UBS and does not affect the Company’s claims against Richard Scrushy and the other defendants in the Tucker action, or against the Company’s former independent auditors Ernst & Young. The settlement agreement is subject to approval of the Court, and HealthSouth estimates that the process for approval will take approximately 60 days.
Under the settlement, HealthSouth will receive $100 million in cash and a release of all claims by UBS including the release and satisfaction of a judgment in favor of UBS, which is currently on appeal before the U.S. Court of Appeals for the Second Circuit. HealthSouth will be obligated to pay the reasonable fees of the derivative plaintiffs’ attorneys to be approved by the Court. After deducting all of the Company’s costs and expenses in connection with the Tucker litigation, HealthSouth, pursuant to the previously disclosed settlement agreements in the consolidated federal securities litigation, will pay 25 percent of the net proceeds, to plaintiffs in the federal securities litigation. The balance of the proceeds will be used by HealthSouth to reduce long-term debt.
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