The Dublin-based e-learning firm SkillSoft, which last year merged with the Irish company SmartForce, has settled a class action lawsuit for $32 million (€26.7 million).
The company will make a cash payment of $10 million within 30 days and an additional $6 million payment in mid-2004 to investors.
SkillSoft's insurance firm will pay an additional $16 million to settle the five-year-old lawsuit.
The lawsuit was initiated by the San Francisco law firm Gold Bennett Cera & Sidener in 1998 on behalf of investors which had bought shares in SmartForce.
The lawsuit alleged that SmartForce defrauded investors by making untrue statements of material fact to induce people to purchase its shares.
It also alleged the scheme enabled defendants to sell shares at artificially inflated prices during 1998.
Defendants in the suit were named as Mr William McCabe, the Irish entrepreneur who served as chairman of SmartForce between 1991 and August 1998, and Mr Greg Priest, the former chief executive of SmartForce. Mr McCabe is not currently a SkillSoft director. Mr Priest is the company's chairman and chief strategy officer.
Several other directors were also named in the lawsuit.
Mr Chuck Moran, SkillSoft president and chief executive, said the company board concluded the settlement was in the best interests of its shareholders.
SkillSoft said its previously announced outlook, a loss of 66-67 cents per share for fiscal 2004, did not take account the multimillion dollar settlement. The e-learning firm will update this outlook when its releases its fiscal third quarter results for the three months to the end of October 2003 later this month.
SkillSoft said it anticipated that its cash position at the end of fiscal 2004 will be between $50 million to $55 million, assuming e-learning sales continue at current levels.
This latest out of court settlement by SkillSoft follows another recent multimillion dollar settlement with the firm, National Education Training Group (NetG).
In July, SkillSoft said it would pay the company $44 million and take a related charge to settle a lawsuit, in which NetG accused it of stealing trade secrets.
However, SkillSoft's legal problems are not over yet. The firm still faces a separate class action lawsuit from investors related to the misstatement of financial information last year following its merger with SmartForce.
Earlier this year, SkillSoft agreed to indemnify all its directors and executives against the raft of litigation that the firm and its management faced this year.
The firm, which is also the subject of an investigation by the Securities and Exchange Commission (SEC), recently disclosed that it pays legal fees worth almost €5 million every quarter.
Shares in SkillSoft reacted positively to news of the legal settlement initially climbing 2 per cent in early trading.
The shares later closed up 23 cents at $7.98 on the Nasdaq.
