Nokia Siemens: 'We're here to stay; we're here to grow '
TORONTO -- TELECOM REPORTER
Nokia Siemens Networks says no other player could match the benefits that its $650-million (U.S.) bid for the wireless assets of Nortel Networks Corp. offers employees, creditors and customers.
Responding to complaints by Nortel creditors that the offer falls short in numerous ways, Nokia Siemens' chief financial officer said it is in the interest of all parties to see the deal close quickly.
"The more time goes by, the more these assets lose value," Luca Maestri said in an interview at The Globe and Mail yesterday.
"These assets are about people. We want to make sure that these people understand they have a long-term future with [Nokia Siemens] and that they don't have to worry about looking for another job," he said.
"We want to send out the message we're here to stay; we're here to grow. We're truly a global business. We have very strong parent companies behind us. Particularly for the engineering talent coming over, we want them to know we have a long-term commitment to R&D."
The telecom equipment and services supplier, a joint venture of Finland's Nokia Corp. and Germany's Siemens AG , is facing growing resistance to its bid.
MatlinPatterson Global Advisors LLC, a private equity firm that invests in distressed companies, said Nortel has failed to make a case to creditors as to why liquidation is a better path than reorganization. The New York firm says it holds about 10 per cent of Nortel's $4.2-billion in bonds. This week, MatlinPatterson unsuccessfully attempted to persuade a U.S. bankruptcy court to extend the deadline on the bidding process, which closes July 24. But the firm continues to work on its own plan to restructure Nortel as a going concern.
Last week, the main group representing Nortel creditors complained that the terms of the bid could stifle other offers because the rules tipped the process in Nokia Siemens' favour.
Nokia Siemens says its offer amounts to the best solution for all parties. Creditors would see cash from the deal in a matter of weeks, customers would no longer need to worry about supply and service arrangements, and at least 2,500 jobs would be preserved in Canada and the U.S., Mr. Maestri said.
"For creditors there is certainty," he said. "At the end of July there is money that gets transferred."
Nokia Siemens has agreed to buy the Nortel unit that makes wireless technology called CDMA, which is widely deployed in North America but is also in the process of being replaced. The offer also covers Nortel's work on the industry's next-generation wireless technology known as LTE, with the significant exclusion of all LTE-related patents.
Although his company had talked to Nortel about acquiring some assets before the bankruptcy filing, serious discussions did not begin until after Jan. 14, and even then there was a strong sense that part of Nortel management wanted to hold on to the assets, Mr. Maestri said. That began to change in May, although it was not until June 19 that a deal was secured.
Nokia Siemens is relying on Export Development Corp. (EDC) for a $300-million loan. Mr. Maestri said the EDC facility is not a subsidy but rather a loan made on regular commercial terms.
WHO PAYS LEGAL BILL?
Nortel Networks Corp.'s insurance policy protecting executives from lawsuits is "ambiguous," and former chief executive officer Frank Dunn must convince a trial judge to order the insurer to pay, an appeals court ruled.
The Court of Appeal for Ontario today ordered a new hearing on Mr. Dunn's claim that Warren, N.J.-based Chubb Corp. must pay 90 or 100 per cent of his legal costs.
"It is impossible to resolve the ambiguity in this case on the factual record before us," Dennis O'Connor, Associate Chief Justice of Ontario, wrote on behalf of the three-member appeals panel.
The U.S. Securities and Exchange Commission, the Ontario Securities Commission and Nortel have all sued Mr. Dunn, 55, and other former executives for allegedly engaging in accounting fraud from 2000 to 2004 at Nortel.
Bloomberg News
