Newport Pharmaceuticals International Inc. of Laguna Hills,Calif., announced on Wednesday that it has reached asettlement in two shareholder class-action lawsuits broughtagainst the company in 1986.

Under the terms of the settlement, Newport (NASDAQ:NWPH)will pay $1,875,000, of which $1.25 million will be in cash. Theremainder will be represented by common stock with a marketvalue of $625,000 at the time of the court's final approval.

In addition, the company agreed to an interest payment of$952,000, also payable in common stock. The settlement willincrease the company's net loss for the year ended Dec. 31,1990 by $2.85 million, to $5.4 million, or 46 cents per share.

Newport's stock closed Wednesday at $4.38, up 6 cents.

The suits alleged fraud and violations of securities laws inconnection with public statements made by the company whenit sought Food and Drug Administration approval for itsproprietary drug, Isoprinosine.

Holders of the company's 10 percent senior secured convertiblenotes vetoed an earlier settlement proposal in which thecompany had sought to pay $1 million to the note holders andissue them shares of common stock with a market value of$1.75 to $2.1 million. Wednesday's settlement does not requireredemption of notes or consent of the note holders. It does,however, require court approval.

-- Rachel Nowak Washington Bureau Chief

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