Auction Day for Nortel

7:50 AM -- Speaking with multiple sources on background this week, we think we've got a picture of the process around today's auction of Nortel Networks Ltd. assets.

We're talking about the stalking horse auction for Nortel's CDMA and LTE assets, of course, a process triggered when Nokia Networks made its $650 million offer. (See NSN Picks at Nortel's Mobile Bones .)

Nortel's lawyers weren't handy to confirm everything, but sources offered up an outline of the rules. Bottom line: The bids are in, but Nokia Siemens can still stage a comeback if it's been outbid by someone like MatlinPatterson Global Advisers LLC or Ericsson AB (Nasdaq: ERIC). (See PE Firm Edges NSN's Nortel Bid and Ericsson Bids for Nortel Wireless Assets.)

Bids had to be filed by Tuesday, but the real auction happens today at Nortel's outside counsel's office -- and not every bidder gets to attend. Just the serious ones, as picked by Nortel. So, Larry the Light Reading Attack Monkey, with his offer of $4.20, a crate of bananas, and a year's supply of pocket lint, shouldn't be waiting by the phone.

(BlackBerry isn't invited either, and has been quite noisy about it -- see RIM Cries Foul Over Nortel Bidding Process. In a recent letter to employees, Nortel CEO Mike Zafirovski says RIM "was not willing to comply with the procedures" approved by the courts.)

At the auction, Nortel will disclose the highest bid. The bidders will then have a chance to rebid, but they have to beat the leader by at least $5 million. So, again, Larry's plot to swoop in on a vine and outbid the winner by one more cent, AH-HAHAHAHA! isn't going to work.

We're told the auction will be a sober affair. They didn't hire this guy.

Eventually, someone's bid ends up being the highest. But wait, as Billy Mays would say -- there's more!

The winning bid has to get approved by the U.S. bankruptcy court, the institution whose rules are forcing this auction in the first place. So, Nortel has an appointment on Tuesday, July 28, to submit the winner as a recommendation, which the judge will probably approve, unless he's in a mood to just mess with people.

Apparently, Nortel's creditors and stakeholders can offer up objections during this final step. So, it's going to be interesting to see who shows up for that -- like, maybe, John Tyson and Ian Craig, the former Nortel executives still lobbying to bring the company back.

Don't hold your breath waiting for the results. At least, don't literally do it. We're told it's likely Nortel won't disclose the winner until after the business day ends -- or maybe even after the weekend. And Nortel's under no obligation to tell anyone what the losing bids were, or who made them.

— Craig Matsumoto, West Coast Editor, Light Reading

rahat.hussain 12/5/2012 | 3:59:58 PM
re: Auction Day for Nortel


when does the auction begin for the other two divisions? and how does this fit in with some buyers who may want to acquire all of nortel?


and how about an update now that it's 6 pm on friday? surely lr has reporters hanging outside the judge's chambers?


odo <-- wondering why there isn't more excitement around this auction, and further wondering if there IS, but odo is not part of it!

rahat.hussain 12/5/2012 | 3:59:57 PM
re: Auction Day for Nortel

thanks craig.

i guess the enterprise date is set by the avaya bid and we don't have a true bid on men yet.

i think you are better off being where you are and not around law offices in canada, eh?

odo <-- who has spent too many hours with lawyers and feels they are not all bad!

Pete Baldwin 12/5/2012 | 3:59:57 PM
re: Auction Day for Nortel

The auctions only happen when somebody puts up a formal offer for a group.  Bankruptcy law (IIRC) calls for a 30-day window for competitive bids to be received.  Then the auction.

If I'm doing the math right, then, the enterprise division would go up for auction a few days after Aug. 19.  The MEN division won't go on auction until someone says they'll buy it.  (Or until the bankruptcy court decides no one's going to buy it, i suppose. I don't know all of the court's options here.)

As for an update -- well, I'm not in the right city to be hanging out around the law offices! but if we're able to suss anything out, we'll certainly post it.

Pete Baldwin 12/5/2012 | 3:59:56 PM
re: Auction Day for Nortel

for $1.13B.


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