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Can Nortel be Saved ...?
(06 Jul 2009, BWCS Staff)A major private equity company in the US is reportedly mulling a dramatic last minute rescue bid for the whole of Nortel Networks. New York-based MatlinPatterson Global Advisors, which specializes in taking over bankrupt companies, is rumoured to be poised to take on the ailing Canadian vendor. According to reports in this morning's Financial Times, the US financial company is currently trying to organize a group of investors to help fund the rescue bid.
The deadline for any buy-out is tight and the company would have to get its ducks in line before July 24th, the date the bankruptcy courts have set for considering Nokia Siemens Networks bid to buy Nortel's core CDMA wireless equipment operations. The NSN bid is said to be worth US$650 million.
At the time the NSN bid was announced, Nortel, which has been in bankruptcy protection since earlier this year, said that it hoped that the sale of part of its wireless business to NSN would save some 2,500 jobs, mainly in the US and Canada. The Canadian government is said to be supporting the NSN deal with a US$300 million loan.
However, a number of Nortel shareholders and bond holders, including MatlinPatterson itself, had objected to the fire-sale. The financial company argued that restrictive conditions imposed by the current bidding process may prevent, rather than promote, a valid competing bid to emerge for the advanced wireless technology unit.
Once worth around US$250 billion, it is expected that Nortel will raise less than US$2 billion for its assets if it sells them off in bankruptcy court. Nortel has suffered over the past two years as its customers have chosen to save money, cut-back on network expenditure and delay upgrades. Last autumn, it tried to raise cash by selling its fast-growing, but unprofitable, Metro Ethernet unit, which provides network equipment for urban data rings, however, buyers failed to materialise. It remains to be seen if this latest rescue bid will work.
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