- Enters into Sale Agreement for CDMA Business and LTE Access Assets
with Ericsson for US$1.13 Billion
- A Minimum of 2,500 Nortel Employees will be Offered the Opportunity
to Continue their Work at Ericsson
- Canadian and U.S. Court Approvals of the Sale will be Sought at a
Joint Hearing on July 28
TORONTO, ONTARIO--(Marketwire - July 25, 2009) - Nortel(i) Networks
Corporation (OTCBB: NRTLQ) announced today that it, its principal
operating subsidiary Nortel Networks Limited, and certain of its
other subsidiaries including Nortel Networks Inc., have concluded a
successful auction of substantially all of Nortel's CDMA Business and
LTE Access assets. Telefonaktiebolaget LM Ericsson ("Ericsson") has
emerged as the winning bidder with a purchase price of US$1.13
billion. The bid is subject to court approvals in the U.S. and Canada
as well as regulatory and other customary closing conditions and
certain post-closing purchase price adjustments.
If approved by the courts, Ericsson will purchase Nortel's CDMA
business which is the second largest supplier of CDMA infrastructure
in the world, and substantially all of Nortel's LTE Access assets
giving it a strong technology position in next generation wireless
networks. Also as part of this agreement, a minimum of 2,500 Nortel
employees supporting the CDMA and LTE Access business will receive
offers of employment from Ericsson.
Commenting on the announcement, Nortel President and Chief Executive
Officer, Mike Zafirovski said:
"The anticipated sale of our CDMA business and LTE Access assets to
Ericsson for $1.13 billion represents a very positive prospect for
our customers who will be able to continue their relationships with a
long term partner; for employees who will have new opportunities at
Ericsson and for many of our other stakeholders. I want to especially
thank our customers for their tremendous support during the process,
which contributed to such a positive outcome."
"Nortel remains focused on finding the right buyers for our other
businesses while continuing to maintain excellent customer service
levels. We are determined to maximize value while preserving
innovation platforms, customer relationships and jobs to the greatest
extent possible. With today's agreement and through the anticipated
sales of the Company's other businesses, Nortel will leave its mark
on the industry for decades to come."
Commenting on the sale, Richard Lowe, President of Carrier Networks
at Nortel, said:
"The outcome of today's auction underscores the value the industry
places on Nortel's CDMA business and LTE Access assets, which include
a strong customer base and world-class operations. Nortel's extremely
talented and committed employees have been an integral part of our
success in wireless and we are very pleased that so many of them will
have the opportunity to continue their innovative work with
Ericsson."
Carl-Henric Svanberg, President and CEO of Ericsson said:
"The agreement between Nortel and Ericsson brings together
leading-edge wireless innovation from two of the world's top
telecommunications suppliers. We at Ericsson look forward to
integrating Nortel's products and talented employees into our
business and realizing the full potential of our combined strengths.
Ericsson is committed to meeting the needs of our new CDMA customers
today and bringing the next generation of mobile broadband to the
world with LTE."
While today's auction is a significant step in the overall sale
process, it is not the final step. Nortel will work diligently with
Ericsson to close the sale later this year. Nortel will seek Canadian
and U.S. court approvals of the proposed sale agreement at a joint
hearing on July 28, 2009.
As previously announced in the Company's June 19 and July 20, 2009
press releases, the Company does not expect that its common
shareholders or the preferred shareholders of Nortel Networks Limited
will receive any value from the creditor protection proceedings and
expects that the proceedings will result in the cancellation of these
equity interests.
Media and Analyst Call: Representatives from Nortel and Ericsson will
hold a conference call for media and analysts on Monday, July 27,
2009 at 10 am EDT. Information on how to join that call will be
available at
http://www.nortel.com/corporate/investor/events/072709/index.html on
Monday morning.
About Nortel
Nortel delivers communications capabilities that make the promise of
Business Made Simple a reality for our customers. Our next-generation
technologies, for both service provider and enterprise networks,
support multimedia and business-critical applications. Nortel's
technologies are designed to help eliminate today's barriers to
efficiency, speed and performance by simplifying networks and
connecting people to the information they need, when they need it.
For more information, visit Nortel on the Web at www.nortel.com . For
the latest Nortel news, visit www.nortel.com/news.
Certain statements in this press release may contain words such as
"could", "expects", "may", "should", "will", "anticipates",
"believes", "intends", "estimates", "targets", "envisions", "seeks"
and other similar language and are considered forward-looking
statements or information under applicable securities laws. These
statements are based on Nortel's current expectations, estimates,
forecasts and projections about the operating environment, economies
and markets in which Nortel operates. These statements are subject to
important assumptions, risks and uncertainties that are difficult to
predict, and the actual outcome may be materially different. Further,
actual results or events could differ materially from those
contemplated in forward-looking statements as a result of the
following (i) risks and uncertainties relating to Nortel's Creditor
Protection Proceedings including: (a) risks associated with Nortel's
ability to: stabilize the business and maximize the value of its
businesses; obtain required approvals and successfully consummate
pending and future divestitures; successfully conclude ongoing
discussions for the sale of Nortel's other assets or businesses;
develop, obtain required approvals for, and implement a court
approved plan; resolve ongoing issues with creditors and other third
parties whose interests may differ from Nortel's; generate cash from
operations and maintain adequate cash on hand in each of its
jurisdictions to fund operations within the jurisdiction during the
Creditor Protection Proceedings; access the EDC Facility given the
current discretionary nature of the facility, or arrange for
alternative funding; if necessary, arrange for sufficient
debtor-in-possession or other financing; continue to have cash
management arrangements and obtain any further required approvals
from the Canadian Monitor, the U.K. Joint Administrators, the French
Administrator, the Israeli Joint Administrators, the U.S. Creditors'
Committee, or other third parties; raise capital to satisfy claims,
including Nortel's ability to sell assets to satisfy claims against
us; maintain R&D investments; realize full or fair value for any
assets or business that are divested; utilize net operating loss
carryforwards and certain other tax attributes in the future; avoid
the substantive consolidation of NNI's assets and liabilities with
those of one or more other U.S. Debtors; attract and retain customers
or avoid reduction in, or delay or suspension of, customer orders as
a result of the uncertainty caused by the Creditor Protection
Proceedings; maintain market share, as competitors move to capitalize
on customer concerns; operate Nortel's business effectively in
consultation with the Canadian Monitor, and work effectively with the
U.K. Joint Administrators, French Administrator and Israeli Joint
Administrators in their respective Administration of the EMEA
businesses subject to the Creditor Protection
Proceedings; actively and adequately communicate on and respond to
events, media and rumors associated with the Creditor Protection
Proceedings that could adversely affect Nortel's relationships with
customers, suppliers, partners and employees; retain and incentivize
key employees and attract new employees, as may be needed; retain, or
if necessary, replace major suppliers on acceptable terms and avoid
disruptions in Nortel's supply chain; maintain current relationships
with reseller partners, joint venture partners and strategic alliance
partners; obtain court orders or approvals with respect to motions
filed from time to time; resolve claims made against Nortel in
connection with the Creditor Protection Proceedings for amounts not
exceeding Nortel's recorded liabilities subject to compromise;
prevent third parties from obtaining court orders or approvals that
are contrary to Nortel's interests; reject, repudiate or terminate
contracts; and (b) risks and uncertainties associated with:
limitations on actions against any Debtor during the Creditor
Protection Proceedings; the values, if any, that will be prescribed
pursuant to any restructuring plan to outstanding Nortel securities;
the delisting of NNC common shares from the NYSE; and the delisting
of NNC common shares and NNL preferred shares from the TSX; and (ii)
risks and uncertainties relating to Nortel's business including: the
sustained economic downturn and volatile market conditions and
resulting negative impact on Nortel's business, results of operations
and financial position and its ability to accurately forecast its
results and cash position; cautious capital spending by customers as
a result of factors including current economic uncertainties;
fluctuations in foreign currency exchange rates; any requirement to
make larger contributions to defined benefit plans in the future; a
high level of debt, arduous or restrictive terms and conditions
related to accessing certain sources of funding; the sufficiency of
workforce and cost reduction initiatives; any negative developments
associated with Nortel's suppliers and contract manufacturers
including Nortel's reliance on certain suppliers for key optical
networking solutions components and on one supplier for most of its
manufacturing and design functions;
potential penalties, damages or cancelled customer contracts from
failure to meet contractual obligations including delivery and
installation deadlines and any defects or errors in Nortel's current
or planned products; significant competition, competitive pricing
practices, industry consolidation, rapidly changing technologies,
evolving industry standards, frequent new product introductions and
short product life cycles, and other trends and industry
characteristics affecting the telecommunications industry; any
material, adverse affects on Nortel's performance if its expectations
regarding market demand for particular products prove to be wrong;
potential higher operational and financial risks associated with
Nortel's international operations; a failure to protect Nortel's
intellectual property rights; any adverse legal judgments, fines,
penalties or settlements related to any significant pending or future
litigation actions; failure to maintain integrity of Nortel's
information systems; changes in regulation of the Internet or other
regulatory changes; and Nortel's potential inability to maintain an
effective risk management strategy.
For additional information with respect to certain of these and other
factors, see Nortel's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009 and Annual Report on Form 10-K for the year
ended December 31, 2008 and other securities filings with the United
States Securities and Exchange Commission. Unless otherwise required
by applicable securities laws, Nortel disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
(i) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.
Contacts:
Nortel
Karen Monaghan
(613) 763-1133
Email: kmonagha@nortel.com
Nortel
Jay Barta
(972) 685-2381
Email: jbarta@nortel.com
Website: www.nortel.com
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