(Adds Clement interview)
By Randall Palmer
OTTAWA Jan 14 The Canadian government pledged
on Wednesday to help Nortel Networks Corp NT.TO NT.N, North
America's biggest telephone equipment maker and major source of
Canadian R&D spending, as it seeks to emerge from bankruptcy
"The government of Canada appreciates the importance of the
telecommunications industry to our economy and will continue to
work with Nortel during its restructuring through Export
Development Canada (EDC)," Industry Minister Tony Clement said
in a statement.
EDC, a government agency, has agreed to provide up to C$30
million ($24 million) in short-term financing through an
existing bonding facility.
In addition, Clement said EDC is open to discussing
financing for Nortel in conjunction with other financial
The Conservative government has traditionally opposed using
public money to rescue ailing companies but announced C$4
billion in emergency loans to the auto industry last month and
has said extraordinary times require extraordinary measures.
The government resisted characterizing its position on
Nortel as a bailout, insisting that whatever EDC did was on a
"I don't see us in this particular instance picking a
winner or loser," Clement told Reuters in an interview.
All the language was geared, however, to the idea making
sure Nortel and the industry as a whole survived rather than
"We have a very competitive and very viable telecoms
industry in this country, and our government is committed to
ensuring that that continues to be the case," he said.
In his statement, he said: "The decision to file for
creditor protection was made by its board of directors in an
effort to turn the company around...
"It is important to note that Nortel is filing for
court-supervised restructuring under the CCAA (Canada's
Companies' Creditors Arrangement Act), not bankruptcy. Nortel
has stated that it has every intention of emerging from this
restructuring under the CCAA as a viable business."
Clement told Reuters that typically a company takes 12 to
18 months to emerge from CCAA and he said many currently
successful Canadian companies, for example Essar Steel Algoma
Inc., have done so.
"There's no immediate threat anymore," he said noting that
the immediacy was a $107 million interest payment that was due
on Thursday. "Now that that is dealt with through the court
protection process, they do have some breathing room."
EDC spokesman Phil Taylor said the agency's risk tolerance
was higher than that of banks, but added: "EDC always operates
on the basis of commercial principles. From the EDC
perspective, there are no bailouts, no handouts. There has to
be a viable plan."
(Additional reporting by Louise Egan; editing by Jeffrey