Riverstone shareholders get 17 more cents
Shareholders of the former Riverstone Networks received a small year-end bonus — a check for nearly 17 cents a share.
RNI Wind Down Corp. – Riverstone’s bankrupt shell – announced the distribution shortly before Christmas, less than three months after it sent out an initial payout of $1.06 per share.
The distribution occurred after a bankruptcy court judge approved some major settlements with Riverstone creditors, including up to a total of $3 million for the legal costs of its former chief executive officer, Romulus Pereira, and former chief financial officer, Robert Stanton.
The two officials, along with four others, face civil charges by the Securities and Exchange Commission for allegedly defrauding investors by inflating revenue when the then-New Hampshire-based Cabletron Systems spun it off in 2001.
The two executives also might need the money to defend themselves against possible criminal charges as well, according to the court-approved stipulation.
Riverstone’s stock price plummeted after the SEC investigation into its accounting became public. It never recovered, and the company filed for bankruptcy in February 2006. Lucent Technologies picked up the company in a bankruptcy sale for more than $200 million.
The question remained, however, over how much was to be distributed to shareholders after the company paid off its debts, including that of the former officers, whose contracts promised reimbursement for legal costs.
The distribution so far — $1.23 a share – is less than a tenth of the stock’s selling price when it was spun off from Cabletron. But it is slightly higher than the price after the company went bankrupt and the SEC halted trading.
“Subsequent distributions will be made as claims are resolved and adequate cash becomes available,” according to an RNI statement. – BOB SANDERS