AT&T; Agrees to Pay At Home Bondholders

AT&T; Corp. said Tuesday that it would pay $340 million to settle claims related to the bankruptcy of At Home Corp., a now-defunct broadband business in which it acquired a controlling stake in 2000.

The company said the payment would not have a material effect on its operating results.

Cable company Comcast Corp. -- which bought AT&T;’s broadband operations in 2003 -- will reimburse AT&T; for half of the settlement amount as set forth in its purchase agreement. The Philadelphia-based company said the payment would reduce its first-quarter profit to $143 million, or 6 cents a share, from previously reported earnings of $313 million, or 14 cents.

AT&T; will pay the funds to the Bondholders’ Liquidating Trust. Bondholders owed more than $750 million sued AT&T; in 2002, accusing it of unfairly dominating At Home’s board.

AT&T; said the agreement settled all claims on behalf of the trust against AT&T; and others in a state court case in California, a patent infringement lawsuit and a number of U.S. Bankruptcy Court claims.

Redwood City, Calif.-based At Home filed for bankruptcy protection in September 2001 and agreed to sell its high-speed Internet business and related services to AT&T.; It ceased operations five months later.

AT&T; and Comcast also agreed to relinquish claims to about $60 million held in reserve by the At Home estate for AT&T; as part of the bankruptcy proceedings. The bondholders trust said that meant it would receive a total of $400 million in the settlement.

The deal still needs to be approved by the U.S. Bankruptcy Court for the Northern District of California.

The settlement was announced after the markets closed. AT&T; shares climbed 14 cents to $19.17 on the New York Stock Exchange. Comcast shares rose 2 cents to $32.17 on Nasdaq and then fell 42 cents to $31.75 in after-hours trading.

Bloomberg News was used in compiling this report.