TORONTO -- Nortel* Networks Corporation announced that it, its principal operating subsidiary Nortel Networks Limited (NNL), and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited (in administration), have entered into a "stalking horse" asset sale agreement with PSP Holding LLC (PSP), a special purpose entity to be fully funded at closing by Marlin Equity Partners (Marlin) and Samnite Technologies Inc., a communications technology company based in Ottawa, for the sale of substantially all of the assets of Nortel's North America, Caribbean and Latin America (CALA) and Asia Multi Service Switch (MSS) business and an asset sale agreement with Marlin for the sale of substantially all of the assets of the Europe, Middle East and Africa (EMEA) portion of its MSS business, for a purchase price of US$39 million in cash.

These agreements include the planned sale of substantially all assets of the MSS business globally including the associated Data Packet Network and Shasta product groups. These agreements also include certain intellectual property related to the MSS business.

Currently, subject to the terms of these agreements as well as any changes that may occur through the stalking horse and sale process, substantially all MSS employees would have the opportunity to continue employment with PSP. This includes the employees assigned to the MSS business in certain EMEA jurisdictions who would transfer to PSP by operation of law.

Commenting on the announcement, John Luszczek, General Manager of Nortel's MSS business said: "Today's announcement is welcome news to all MSS customers, suppliers, partners and employees. The proposed transaction represents a clear and positive step forward and is a testament of our continued commitment to innovation and customer support that resulted in the creation of the business value evident by today's announcement. Throughout this process we will remain focused on providing our customers with the highest level of service, support and responsiveness that they have come to expect."

Nortel Networks Ltd.