June 23, 2009--Communications company Nortel Networks Corporation (Toronto, ON, Canada) announced that its principal operating subsidiary Nortel Networks Limited (NNL) and certain of NNL's subsidiaries including Nortel Networks Inc., entered into an agreement with Nokia Siemens Networks B. V. for the sale of substantially all of its wireless access business assets for $650 million. In addition, Nortel is advancing its discussions with external parties to sell its other businesses (see "Telecom industry reacts to Nortel bankruptcy filing").
The early 2009 bankruptcy filing by Nortel was an indication of an unhealthy communications market (see "What will make telecom turn around?").
The company says it will assess other restructuring alternatives for these businesses in the event it is unable to maximize value through sales. In addition, as discussed in more detail below, Nortel will apply to delist its common shares and the NNL preferred shares from trading on the Toronto Stock Exchange (TSX) and expects that the creditor protection proceedings will ultimately result in the cancellation of these equity interests. Trading in such shares on the TSX is expected to be suspended pending the TSX's decision on the delisting application.
Nortel president and CEO Mike Zafirovski said, "Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible. This will ensure Nortel's strong assets - technologies, customer relationships, and employees - continue to play an important role in driving the future of communications."
Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice.
For more information, go to www.nortel.com.
--Posted by Gail Overton, [email protected]; www.laserfocusworld.com.