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RIM Cries Foul Over Nortel Bidding Process

BlackBerry maker BlackBerry says it has been prevented from entering this week's auction for Nortel Networks Ltd. wireless assets, claiming it has been "blocked at every turn."

In a statement issued Monday evening, RIM said it would be prepared to bid "in the range of US$1.1 billion" for the CDMA, LTE (Long Term Evolution), and "certain other Nortel assets. RIM believes that such an offer would result in an extremely attractive price for Nortel creditors and value substantially in excess of the stalking horse bid made by Nokia Siemens Networks," which has offered $650 million. (See NSN Picks at Nortel's Mobile Bones and Will Others Bid for Nortel's Wireless Assets? )

The Nokia Siemens Networks (NSN) bid, announced in June, kickstarted an auction process that comes to a head this week: The deadline for rival bids is today (Tuesday, July 21), while the actual auction is set for this Friday, July 24, after which the Delaware bankruptcy court that is handling Nortel's case will decide whether to approve a sale. (See NSN May Buy Other Nortel Assets, Nortel Bid Plot Thickens, and Nortel Creditor Preps Rescue Plan.)

As RIM's valuation is notably higher than NSN's, it's possible that RIM was looking to buy Nortel's wireless intellectual property rights (IPR), which are not included in the NSN bid. (See Nortel's LTE Patent Goldmine.)

But RIM claims it was told it would only qualify to be a bidder in this week's process "if it promised not to submit offers for other Nortel assets for a period of one year. In seeking to impose this condition, Nortel and its advisors were fully aware of RIM's desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel's business under Canadian ownership."

RIM states that "despite repeated efforts, Nortel, its advisors and its court-appointed monitor have rejected RIM's repeated attempts to engage in meaningful discussions."

In the company's statement, RIM's co-CEO Jim Balsillie said the BlackBerry maker is "extremely disappointed that Nortel's world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada's own Export Development Corporation is preparing to help by lending $300 million to another bidder." That's a reference to NSN's financing arrangements. (See How NSN Is Funding Its Nortel Bid.)

The CEO added: "RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM's leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn."

Ouch!

And just to hammer home the message, RIM added that it "believes that the loss of Canadian ownership of Nortel's CDMA and Long Term Evolution Access businesses may significantly, adversely affect national interests, with potential national security implications, and that the Government of Canada should review the situation closely."

Nortel, naturally, has an alternative view of events.

In a statement emailed to Unstrung Nortel stated that it is

    ...disappointed that RIM has decided to issue a press release relating to the scheduled auction for Nortel's CDMA and LTE assets. As previously announced, Nortel entered into a stalking horse sale agreement with Nokia Siemens to sell these assets, which agreement is subject to higher or better offers.

    On June 30, 2009, the courts established bidding procedures for auction of these assets. RIM did not object to the approval of these procedures. Since the approval of the procedures, Nortel has engaged with a number of potential bidders, including RIM. Other parties moved expeditiously to comply with the court approved procedures to become a qualified bidder. It was not until July 15, 2009 that RIM submitted a letter to Nortel asking to be a qualified bidder and since that time, Nortel has diligently attempted to work with RIM on acceptable confidentiality terms relating to Nortel's valuable intellectual property assets, but RIM refused to comply with the court approved procedures...

    Notwithstanding RIM's statement today, Nortel continues to be willing to provide RIM with the opportunity to participate in the auction and even without RIM's participation believes that an active auction will result in maximizing the value of Nortel's assets.


Nortel is in the midst of selling its various business units: The latest announced offer is a $475 million bid for its Enterprise Solutions division. (See Avaya Offers $475M for Nortel's Enterprise, Who's Waving Their Wad at Nortel’s MEN?, and Who's Dialing In for Nortel's VoIP Assets? ) — Ray Le Maistre, International News Editor, Light Reading

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