Nortel Networks may not be emerging from bankruptcy. The company announced it is selling off virtually all of its CDMA and Long Term Evolution (LTE) evolution assets through a "stalking horse" asset sale agreement with Nokia Siemens Networks. Nokia is getting its hands on the valuable businesses for a steal: $650 million.
This appears to be the first of many fire sales as Nortel announced it is in discussions with external parties to sell its other businesses. Nortel said it will assess other restructuring alternatives for these businesses in the event it is unable to maximize value through sales. In addition, 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.
NSN is getting its hands on a CDMA business that is the second largest in the world and an LTE business that has strong potential. Nortel said Verizon Wireless was happy with its gear but was concerned about Nortel's bankruptcy. NSN has no CDMA networks business.
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.
- see this release
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