Update: Magnetek Ordered to Pay Inventor $23.4 Million, Shares Dive

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Shares of Magnetek Inc. plunged more than 44 percent after the L.A.-based maker of digital power products said it was ordered to pay $23.4 million to end an inventor’s lawsuit over electronic ballasts used in fluorescent lamps.


The decision by the arbitrator is final and cannot be appealed, Magnetek said in a press release Wednesday.


If Magnetek can’t negotiate a payment agreement with inventor Ole K. Nilssen, it could be forced to reorganize under bankruptcy protection. “That’s a remote possibility,” company spokesman Bob Murray said. “Our first priority would be to avoid bankruptcy. We think this is a manageable situation unpleasant, yes, but manageable. We do have the resources to cover the award, but cannot pay within the time specified by the arbitration decision. It was a very short one in 10 days, the payment is due.”


Magnetek and Nilssen agreed to arbitration in 2003, and the process began in November. The two sides had failed to reach agreement on a long-standing patent-infringement lawsuit Nilssen filed in 1998. The lawsuit was related to patents of certain types of electronic ballasts previously sold by Magnetek. The company has denied that it infringed Nilssen’s patents.


“While it was unexpected, the decision is final, binding and not subject to appeal or explanation by the arbitrator,” Magnetek said in the release. “The company has entered into discussions with its advisers and with Mr. Nilssen and his advisers regarding various available options.”


Magnetek shares closed down 44.7 percent to $2.19 on Wednesday.

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