Nortel looking to exit LG joint venture

Nortel Networks wants to sell its 50% stake in the networking joint venture it has with LG Electronics, according to a report in the Financial Times.

The bankrupt telecom equipment maker hired Goldman Sachs to find a buyer for its stake, according to the report, which cited unnamed sources familiar with the matter.

Nortel did not deny the report, and declined to say it was committed to the LG venture.

“Despite the difficulties facing Nortel, LG-Nortel is a separate and independent entity that is debt-free with a strong cash balance and is not involved in Nortel's Chapter 11 filing and CCAA creditor protection proceedings,” Nortel told telecomasia.net.

“This JV has been - and continues to be - a great success story for its shareholders, employees and customers.”

FT said that the sale could value the partnership at $1 billion, which would provide some much-needed funding to cash-strapped Nortel. LG-Nortel had revenues last year of around $1 billion.

The three-year-old 3G JV employs 1400 staff.

Separately, Nortel will be able to remain in bankruptcy for another three months; Ontario Superior Court Judge Geoffrey Morawetz yesterday granted Nortel's request for the extension, which now stretch to July 30.

The company filed for bankruptcy in mid-January. Nortel posted a $2.14 billion loss in the fourth quarter and a $5.8 billion loss for all of 2008.

For more:
- see this FT article
- see this Bloomberg News article

 

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