Nortel to Sell Wireless Assets to NSN 668669

For $650M, Nokia Siemens picks up Nortel's CDMA business, its LTE assets, and potentially 2,500 employees

June 19, 2009

5 Min Read

TORONTO -- Nortel Networks Corporation [TSX: NT | OTC: NRTLQ] today announced that it, its principal operating subsidiary Nortel Networks Limited (NNL) and certain of NNL's subsidiaries, including Nortel Networks Inc., have entered into a "stalking horse" asset sale agreement with Nokia Siemens Networks B. V. (NSN) for the sale of substantially all of its CDMA business and LTE Access assets for US$650 million.

The agreement with NSN specifies that at least 2,500 employees would have the opportunity to continue with NSN. This represents a significant portion of the employees associated with the assets being sold.

In addition to announcing this sale agreement, Nortel announced that it is advancing in its discussions with external parties to sell its other businesses. The company will assess other restructuring alternatives for these businesses in the event it is unable to maximize value through sales. In addition, as discussed in more detail below, Nortel will apply to delist its common shares and the NNL preferred shares from trading on the Toronto Stock Exchange (TSX) and expects that the creditor protection proceedings will ultimately result in the cancellation of these equity interests. Trading in such shares on the TSX is expected to be suspended pending the TSX's decision on the delisting application.

Commenting on the announcements, Nortel President and Chief Executive Officer, Mike Zafirovski said:

"Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible. This will ensure Nortel's strong assets - technologies, customer relationships, and employees - continue to play an important role in driving the future of communications. The value of Nortel's wireless business is recognized throughout the industry. The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses."

Zafirovski continued: "We also believe this will help provide clarity for our customers and employees. Customers have demonstrated consistent support for our products and services, and we want to ensure they continue to benefit from Nortel's technology and know-how. In addition, Nortel's employees are doing a tremendous job under challenging conditions, stabilizing our business and delivering outstanding service to our customers. It is important to provide our employees with a clear sense of direction around their future and potential opportunities with the new companies."

The wireless business is the second largest supplier of CDMA infrastructure in the world. It does business with three of the five top CDMA operators globally, including Verizon Wireless, which operates the largest wireless voice and data network in the United States.

Commenting on the wireless business announcement, Richard Lowe, President, Carrier Networks added:

"Seeking a strong and stable buyer is the best path forward for our CDMA business and LTE Access assets. If successfully completed, this transaction would give many of our CDMA customers a clear roadmap for the future evolution of their networks and the opportunity to extend their relationship with a long-term partner. Further, we expect that a significant portion of the employees associated with the assets being sold would be able to continue their innovative work."

Lowe continued, "Nortel has a long track record of wireless innovation which has helped us secure a strong and loyal customer base. Throughout this sale process, our customers will continue to receive the highest quality support for their current networks. If successfully concluded, the buyer would gain access to leading edge technology, know-how, and embedded resources to support this significant customer base."

Share Value; TSX Delisting
Based upon today's announcements and Nortel's current assessment of its businesses in the context of its creditor protection proceedings, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will ultimately result in the cancellation of these equity interests. As a result, the Company will apply to delist its common shares and the NNL preferred shares from trading on the TSX. Trading in such shares on the TSX is expected to be suspended (commencing before the opening of trading on Monday, June 22, 2009) with the consent of the Monitor under the Canadian creditor protection proceedings, pending the TSX's decision on the delisting application.

Details of Sale Process for CDMA Business and LTE Access Intellectual Property Rights
Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice.

In addition to the bidding process and U.S. and Canadian court approvals, consummation of the CDMA business and LTE Access transaction is subject to the satisfaction of customary and other conditions, including governmental approvals such as in Canada and the United States. The stalking horse asset sale agreement is also subject to purchase price adjustments under certain circumstances.

Nortel Networks Ltd.

Nokia Networks

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