Nortel to Seek Buyer for Stake in LG-Nortel Joint Venture

TORONTO, ONTARIO, May 27 (MARKET WIRE) --
Nortel(1) (TSX: NT)(OTCBB: NRTLQ) today announced that its principal
operating subsidiary, Nortel Networks Limited, has decided to seek a
buyer for its majority stake (50% + 1 share) in LG-Nortel, the company's
Korean joint venture with LG Electronics. Nortel has made this decision
to secure a sound future for the LG-Nortel business, its valued customers
and loyal employees.

LG-Nortel is a profitable, standalone business with a strong balance
sheet, and has not filed for creditor protection. The joint venture has
enjoyed solid revenues and profits since its establishment in November
2005, with several significant customer wins in Korea and abroad. The
business achieved a Management Operating Margin(2) of $341 million, or
27%, in 2008, and Management Operating Margin for the first quarter of
2009 of 26%.

"This proposed divestiture represents the best path forward for
LG-Nortel, its customers and employees," said Peter MacKinnon,
LG-Nortel's Chairman and General Manager. "LG-Nortel is a strong,
independent, technologically astute and commercially savvy organization.
With a competitive portfolio of wireless, wireline and enterprise
solutions, LG-Nortel is a market leader in Korea and select international
markets. Our number one priority is the continued success of LG-Nortel
and our customers."

"LG-Nortel is a successful business with an accomplished leadership team,
a culture of innovation, a dedicated employee base and a drive to
succeed," said Mike Zafirovski, President and CEO, Nortel. "As we work to
evaluate the ultimate path forward for all of our businesses, this
decision will allow LG-Nortel to embark on the next phase of its journey
and realize its full potential."

Pursuant to its ongoing creditor protection proceedings, Nortel Networks
Limited will file a motion with the Ontario Superior Court of Justice for
approval of a proposed sale process that has been agreed with LG
Electronics and the appointment of Goldman Sachs to assist with the
proposed divestiture. Any proposed sale that results from the sale
process will require the consent of LG Electronics under the terms of the
joint venture agreement, and further approval of the Ontario Court.

(2) Management Operating Margin is defined as revenues less cost of
revenues, SG&A and R&D expense

About LG-Nortel

LG-Nortel is a joint venture of LG Electronics and Nortel. Established in
2005, LG-Nortel provides leading edge telecommunications equipment and
network solutions, spanning wired and wireless technologies to service
provider and enterprise customers in Korea and around the world.
LG-Nortel is also actively developing next generation solutions for
global markets, with over 750 skilled R&D engineers currently focused on
wireless broadband technology evolution and the development of powerful
new product lines. For more information on LG-Nortel, visit
www.lg-nortel.com.

About Nortel

Nortel is a recognized leader in delivering communications capabilities
that make the promise of Business Made Simple a reality for our
customers. Our next-generation technologies, for both service provider
and enterprise networks, support multimedia and business-critical
applications. Nortel's technologies are designed to help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when they
need it. Nortel does business in more than 150 countries around the
world. For more information, visit Nortel on the Web at www.nortel.com.
For the latest Nortel news, visit www.nortel.com/news.

Certain statements in this press release may contain words such as
"could", "expects", "may", "should", "will", "anticipates", "believes",
"intends", "estimates", "targets", "envisions", "seeks" and other similar
language and are considered forward-looking statements or information
under applicable securities laws. These statements are based on Nortel's
current expectations, estimates, forecasts and projections about the
operating environment, economies and markets in which Nortel operates.
These statements are subject to important assumptions, risks and
uncertainties that are difficult to predict, and the actual outcome may
be materially different. Further, actual results or events could differ
materially from those contemplated in forward-looking statements as a
result of the following (i) risks and uncertainties relating to Nortel's
Creditor Protection Proceedings including:

(a) risks associated with Nortel's ability to: stabilize the business and
maximize the value of its businesses; develop, obtain required approvals
for, and implement a restructuring plan; resolve ongoing issues with
creditors and other third parties whose interests may differ from
Nortel's; generate cash from operations and maintain adequate cash on
hand in each of its jurisdictions to fund operations within the
jurisdiction during the Creditor Protection Proceedings; operate within
the restrictions and limitations of the current EDC Support Facility or
put in place a longer term solution; if necessary, arrange for sufficient
debtor-in-possession or other financing; continue to have cash management
arrangements and obtain any further required approvals from the Canadian
Monitor, the U.K. Joint Administrators, the U.S. Creditors' Committee, or
other third parties; raise capital to satisfy claims, including Nortel's
ability to sell assets to satisfy claims against us; obtain sufficient
exit financing to support a restructuring plan; maintain R&D investments;
realize full or fair value for any assets or business that may be
divested; utilize net operating loss carryforwards and certain other tax
attributes in the future; avoid the substantial consolidation of NNI's
assets and liabilities with those of one or more other U.S. Debtors;
attract and retain customers or avoid reduction in, or delay or
suspension of, customer orders as a result of the uncertainty caused by
the Creditor Protection Proceedings; maintain market share, as
competitors move to capitalize on customer concerns; operate Nortel's
business effectively in consultation with the Canadian Monitor, and work
effectively with the U.K. Joint Administrators in their Administration of
the European businesses inside U.K. Administration; actively and
adequately communicate on and respond to events, media and rumors
associated with the Creditor Protection Proceedings that could adversely
affect Nortel's relationships with customers, suppliers, partners and
employees; retain and incentivize key employees and attract new
employees; retain, or if necessary, replace major suppliers on acceptable
terms and avoid disruptions in Nortel's supply chain; maintain current
relationships with reseller partners, joint venture partners and
strategic alliance partners; obtain court orders or approvals with
respect to motions filed from time to time; resolve claims made against
Nortel in connection with the Creditor Protection Proceedings for amounts
not exceeding Nortel's recorded liabilities subject to compromise;
prevent third parties from obtaining court orders or approvals that are
contrary to Nortel's interests; reject, repudiate or terminate contracts;
and

(b) risks and uncertainties associated with: limitations on actions
against any Debtor during the Creditor Protection Proceedings; the
values, if any, that will be prescribed pursuant to any restructuring
plan to outstanding Nortel securities; the delisting of NNC common shares
from the NYSE; and the potential delisting of NNC common shares and NNL
preferrred shares from the TSX; and (ii) risks and uncertainties relating
to Nortel's business including: the sustained and expanding economic
downturn and extraordinarily volatile market conditions and resulting
negative impact on Nortel's business, results of operations and financial
position and its ability to accurately forecast its results and cash
position; cautious capital spending by customers as a result of factors
including current economic uncertainties; fluctuations in foreign
currency exchange rates; any requirement to make larger contributions to
defined benefit plans in the future; a high level of debt, arduous or
restrictive terms and conditions related to accessing certain sources of
funding; the sufficiency of workforce and cost reduction initiatives; any
negative developments associated with Nortel's suppliers and contract
manufacturers including Nortel's reliance on certain suppliers for key
optical networking solutions components and on one supplier for most of
its manufacturing and design functions; potential penalties, damages or
cancelled customer contracts from failure to meet contractual obligations
including delivery and installation deadlines and any defects or errors
in Nortel's current or planned products; significant competition,
competitive pricing practices, industry consolidation, rapidly changing
technologies, evolving industry standards, frequent new product
introductions and short product life cycles, and other trends and
industry characteristics affecting the telecommunications industry; any
material, adverse affects on Nortel's performance if its expectations
regarding market demand for particular products prove to be wrong;
potential higher operational and financial risks associated with Nortel's
international operations; a failure to protect Nortel's intellectual
property rights; any adverse legal judgments, fines, penalties or
settlements related to any significant pending or future litigation
actions; failure to maintain integrity of Nortel's information systems;
changes in regulation of the Internet or other regulatory changes;
Nortel's potential inability to maintain an effective risk management
strategy. For additional information with respect to certain of these and
other factors, see Nortel's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2009 and Annual Report on Form 10-K for the year ended
December 31, 2008 and other securities filings with the United States
Securities and Exchange Commission. Unless otherwise required by
applicable securities laws, Nortel disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

(1) Nortel, the Nortel logo and the Globemark are trademarks of Nortel
Networks.

Contacts:
Nortel
Jay Barta
+1 972 685 2381
jbarta@nortel.com

Nortel
Matthew Wray
+852 2100 2238
wraym@nortel.com
www.nortel.com

LG-Nortel
Bohyun Kim
+82 2 2005 2128
kimvo@lg-nortel.com
www.lg-nortel.com

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