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Selling Nortel's MEN

Phil Harvey
6/24/2009

5:45 PM --

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— Phil Harvey, Editor-in-Chief, Light Reading

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DCITDave
DCITDave
12/5/2012 | 4:01:58 PM
re: Selling Nortel's MEN
It's my thinking cap. (Sorry, no room in the budget for a "set" in video blogland.)
Larry, Monkey
Larry, Monkey
12/5/2012 | 4:01:58 PM
re: Selling Nortel's MEN
Interesting points, but great helicopter beanie!
DCITDave
DCITDave
12/5/2012 | 4:01:57 PM
re: Selling Nortel's MEN


is that a shot at nortel's transport gear? or my so-called hat?

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:01:57 PM
re: Selling Nortel's MEN
Two words....fraudulent conveyence....

seven
Stevery
Stevery
12/5/2012 | 4:01:57 PM
re: Selling Nortel's MEN


It's not fraudulent conveyance if you give share ownership to the outstanding debtors, which the court would certainly do if it were US.  (I assume canucks do something similar.)


The bigger question is whether there is a profitable business in there, or whether the leadership / market position is permanently damaged.  That would depend on how the newco was structured.  (If they tried to push a wad of debt into it, then customers should run away screaming.)

DCITDave
DCITDave
12/5/2012 | 4:01:56 PM
re: Selling Nortel's MEN


Totally agree about the debt. If the new company is simply a privately held vehicle to hide a bad balance sheet, customers won't stick around.


But something must be done soon so that potential customers won't be put off by all the months of uncertainty. Unfortunately, that's quite a challenge since Nortel is juggling negotiations with so many different businesses all at once. 


Quite a mess, that Nortel.


ph


 

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:01:55 PM
re: Selling Nortel's MEN


 


Private equity basically runs on cash flow.  They take distressed assets and take cash out of them more than they bought them for.  So, if they think they can cut enough people to get the business to good profitability and ride it out then that would work.  Not going to be a group that builds a company back up.


seven


 

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:01:55 PM
re: Selling Nortel's MEN


Thanks for the assist Stevery!


Phil,


The basic problem is that you can not clean a balance sheet by whim.  The debtholders own the company.  As Stevery says you could give them a slice of the pie.  Alternately, you can sell the asset for money and give that to the debtholders.  But what you can't do is take an asset out of the firm and give the debtholders no compensation.


So, Nortel is off selling the assets in a way to garner the debtholders as much money as possible.  If the debtholders wanted to own stock in an MEN group, that would work but would have to be convinced that they are better served getting a stock that can appreciate other than cash. 


seven


 

DCITDave
DCITDave
12/5/2012 | 4:01:55 PM
re: Selling Nortel's MEN


How strong a possibility is the private equity option? Seems like it would be an interesting deal if Nortel sold the asset to a group of investors, then paid debt holders with the proceeds. I think that would leave the MEN group to run as an independent company, with no Nortel baggage. 


Whaddya think?

DCITDave
DCITDave
12/5/2012 | 4:01:54 PM
re: Selling Nortel's MEN


Yeah, I know companies that work like that. (Hi, boss!)


 


Okay, let's get to the real issue here: How much do you think Sycamore will pay for Nortel's MEN group? Huh? How much?


:)


ph

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