Six weeks ago (June 19 to be exact), Nortel (NRTLQ.PK) issued a press release about the proposed sale of its CDMA wireless business and LTE R&D unit to Nokia Siemens (NOK/SI).
While that was major news, the more significant development was Nortel disclosing that “it is advancing in its discussions with external parties to sell its other businesses. The company will assess other restructuring alternatives for these businesses in the event it is unable to maximize value through sales.”
At the time, the assumption was this marked the end of Nortel because, after all, a company can’t exist without any businesses.
Today, however, there appears to be a growing question about whether Nortel is going to disappear. A story in Friday’s National Post asked whether Nortel could emerge from bankruptcy protection as a licensee of patents – a potentially lucrative entity given Nortel owns more than 1,300 patents.
“It was never stated categorically that they were going to liquidate the entire company,” Richard Powers, associate dean at the Rotman School of Management at the University of Toronto told the National Post. “It was always thought the Nortel name would not drop off the board and that it might retain some format to continue in a downsized version of what it was.”
While it’s true Nortel “never stated categorically” it was selling everything, everyone figured this was the case…and it may still be the case.
That said, it is interesting to consider whether Nortel’s restructuring is taking a different path other than a complete asset sale.
A press release on Thursday announcing an extension of protection from Canadian creditors talked about “continue to assess other restructuring alternatives if it is unable to maximize value through sales and file a plan of arrangement”. This suggests perhaps there other plans on the table.
At the same time, the Nortel Garage Sale has been a slow process with many units – enterprise, Metro Ethernet Networks, carrier – still on the block. If Nortel can’t attract good prices for these assets, then maybe its creditors will have to accept alternatives rather than see the company accept deep discount offers.
Frankly, I don’t see Nortel emerging from bankruptcy protection to become a small and viable player. The best shot of that happening was Matlin Patterson’s proposal to make an offer for the entire company before the CDMA business was sold to Ericsson (ERIC).
In any event, this long-running soap opera – “As the Nortel Turns” – continues to see interesting plot twists. |
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