RSA ANNOUNCES $100 MILLION SETTLEMENT WITH UBS WARBURG
Apr 23, 2010
MONTGOMERY, Ala., April 21, 2010 – The Retirement Systems of Alabama
(RSA), court appointed Lead Plaintiff of a class of bond purchasers of
HealthSouth Corporation (HealthSouth), today announced that it had reached
separate class action settlements with UBS AG, UBS Warburg LLC, Benjamin
D. Lorello, William C. McGahan and Howard Capek (collectively, UBS) and
with Ernst & Young LLP (E&Y).
The total consideration to be paid in the UBS settlement is $100 million
in cash and E&Y has agreed to pay $33.5 million in cash, for a total
of $133.5 million. These settlements follow an earlier settlement with
HealthSouth and its former outside directors valued at approximately $90
million for the bond class. Bond purchasers will also receive approximately
5% of the recovery achieved in Alabama state court in a separate action
brought on behalf of HealthSouth against UBS and Richard Scrushy.
To date, the plaintiffs in that action have achieved a $100 million settlement
with UBS and a $2.8 billion judgment against former HealthSouth founder
Richard Scrushy. The total settlement for injured HealthSouth bond purchasers
will be in excess of $230 million. RSA believes that this is an outstanding
recovery for the class in that it should recoup over a third of bond purchaser damages.
The UBS and E&Y settlement funds will be distributed to HealthSouth
bond purchasers in a consolidated securities class action presently pending
before the Honorable Karon Owen Bowdre in United States District Court
in Birmingham, Alabama.
“We are excited to announce this excellent result for the HealthSouth
bond investors we represent,” said RSA’s Chief Executive Officer,
David Bronner. “These settlements were achieved after years of vigorous
prosecution, resulting in the recent certification of a class of bond
purchasers by the court,” said Bronner. “We believe these
substantial settlements reflect a great result for bond purchasers who
were damaged as a result of the massive fraud at HealthSouth.”
The UBS settlement was negotiated under the supervision of court-appointed
mediator Professor Eric Green. Both the UBS and E&Y settlements must
be reviewed and approved by Judge Bowdre, after notice to the class.
The bond purchaser class is represented in the litigation and settlement
proceedings by Cunningham Bounds of Mobile, Alabama, Bernstein Litowitz
Berger & Grossmann LLP of New York and Donaldson & Guin, LLC of
Birmingham, Alabama. Bill Kelley, RSA Counsel, supervised these firms
throughout the litigation and settlement proceedings.
CONTACT: William F. Kelley, Retirement Systems of Alabama, (334) 517-7000;
bill.kelley@rsa-al.gov
SOURCE: Retirement Systems of Alabama; www.rsa-al.gov