Nortel receives stalking horse bid for multi-service switch business

AUGUST 27, 2010 -- Nortel Networks Corp. (OTCBB:NRTLQ) says it has entered a "stalking horse" asset sale agreement with PSP Holding LLC, a special purpose entity to be fully funded at closing by Marlin Equity Partners and Samnite Technologies Inc. (a communications technology company based in Ottawa) for the sale of substantially all of the assets of Nortel's North America, Caribbean and Latin America (CALA) and Asia multi-service switch (MSS) business and an asset sale agreement with Marlin for the sale of substantially all of the assets of the Europe, Middle East, and Africa (EMEA) portion of its MSS business.

AUGUST 27, 2010 -- Nortel Networks Corp. (OTCBB:NRTLQ) says it has entered a "stalking horse" asset sale agreement with PSP Holding LLC, a special purpose entity to be fully funded at closing by Marlin Equity Partners and Samnite Technologies Inc. (a communications technology company based in Ottawa) for the sale of substantially all of the assets of Nortel's North America, Caribbean and Latin America (CALA) and Asia multi-service switch (MSS) business and an asset sale agreement with Marlin for the sale of substantially all of the assets of the Europe, Middle East, and Africa (EMEA) portion of its MSS business. The total purchase price would be US$39 million in cash.

As was the case when Ciena submitted a stalking horse bid for Nortel’s Metro Ethernet Networks (MEN) assets, the agreement merely sets a sales process in motion under Nortel’s bankruptcy agreements. Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.

Meanwhile, for the sale of the EMEA assets, the UK Joint Administrators have the authority, without further court approval, to enter into the EMEA asset sale agreement on behalf of those relevant Nortel entities. In some EMEA jurisdictions, this transaction is subject to information and consultation with employee representatives and/or employees.

In addition to these processes and approvals the final transaction is subject to the satisfaction of regulatory and other conditions and the receipt of various approvals. The agreements are also subject to certain working capital and other purchase price adjustments, Nortel adds.

The agreements include the planned sale of substantially all assets of the MSS business globally including the associated Data Packet Network and Shasta product groups. These agreements also include certain intellectual property related to the MSS business.

Currently, subject to the terms of these agreements as well as any changes that may occur through the stalking horse and sale process, substantially all MSS employees would have the opportunity to continue employment with PSP. This includes the employees assigned to the MSS business in certain EMEA jurisdictions who would transfer to PSP by operation of law.

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