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No decision on Nortel breakup: source
March 12, 2009 / 12:07 PM / 9 years ago

No decision on Nortel breakup: source

<p>A Nortel sign is seen in downtown Toronto February 27, 2008. REUTERS/Mark Blinch</p>

TORONTO (Reuters) - Nortel Networks Corp is still working on a strategy that will see it emerge from bankruptcy protection, even as the beleaguered telecom equipment maker mulls which of its assets to sell to narrow its focus, a source familiar with the situation said on Thursday.

“There haven’t been any decisions” made regarding breaking up and selling the company and Nortel wants to present a “concrete” analysis of its assets to its creditors in April, the source told Reuters, speaking on condition of anonymity because the person is not authorized to discuss the matter publicly.

Nortel, North America’s biggest maker of telephone equipment, filed for bankruptcy protection in January, blaming the economic crisis for derailing a turnaround effort that began in 2005.

It had about $2.4 billion in cash when it sought court protection from its creditors and about $4.5 billion in debt. In February, it disclosed in court filings that it is reviewing the “strategic and economic” value of its many subsidiaries.

The source said on Thursday that in order to get a detailed picture of what the divisions may be worth, Nortel has reached out to potentially interested parties to gauge possible prices.

The comments came amid media reports that Nortel could be broken up and sold, rather than have the company emerge from bankruptcy protection, as interested parties make offers for its core business lines.

The source also said that as Nortel ponders narrowing its focus, some sort of asset sale or divestiture is likely, though it is too early to tell what shape such a transaction could take.

Nortel spokesman Mohammed Nakhooda declined comment.

A second source also told Reuters on Thursday that Nortel has held talks with Nokia Siemens Networks regarding some businesses that Nortel plans to sell, but no decisions have been made on either side.

Toronto-based Nortel revealed last month that it had suspended plans to sell its Metro Ethernet Networks unit while it formulates an overall business plan.

Analysts had speculated the division, which includes Nortel’s optical and carrier ethernet technology, could fetch as much as $1 billion.

The business -- which accounts for roughly 14 percent of Nortel’s revenue -- was put up for sale in September, but no bids materialized.

Nortel shares fell 1.5 Canadian cents to 8.5 Canadian cents on the Toronto Stock Exchange on Monday afternoon. In mid-2000, at the height of the company’s success, they were worth more than $1,100 each, adjusted for a stock consolidation that took place in 2006.

Reporting by Wojtek Dabrowski; editing by Rob Wilson

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