LG Electronics, Nortel pair on telecom, networking platforms

August 17, 2005 Seoul, South Korea -- LG Electronics and Nortel today signed a definitive agreement to form a joint venture that will offer telecom and networking platforms in the wireline, optical, wireless, and enterprise areas for South Korean and global customers.

Aug 17th, 2005

August 17, 2005 Seoul, South Korea -- LG Electronics and Nortel today signed a definitive agreement to form a joint venture that will offer telecom and networking platforms in the wireline, optical, wireless, and enterprise areas for South Korean and global customers.

The agreement was signed in Seoul by S.S. Kim, CEO and vice-chairman of LG Electronics, and Bill Owens, vice-chairman and CEO of Nortel. The joint venture will be tentatively named LG-Nortel Co. Ltd. The companies say the entity will combine the telecommunication infrastructure business of LG Electronics and the distribution and service business of Nortel in South Korea.

"Today is another milestone for Nortel as we continue to demonstrate our commitment to open up the Asia region with a best-in-class technology leader," comments Owens. "Our relationship with LG better positions Nortel in the dynamic and growing Asia market, will expedite research and development, and will benefit our global customers."

"LG Electronics' R&D excellence coupled with Nortel's global presence will make this joint venture a top-ranking player in the telecommunications equipment market," adds Kim. "Our relationship will further strengthen the two companies' collaboration in setting standards for next generation infrastructure and improving time-to-market in this competitive environment."

Nortel will own 50% plus one share in the joint venture, in exchange for which the company will contribute its South Korean distribution and services business, and pay $145 million and other non-monetary consideration. Separately, LG Electronics may be entitled to payments over a two-year period, based on the joint venture's achievement of certain business goals.

The companies say they will nominate certain key executives to the management team of the joint venture; it is the intention of the parties to nominate J. R. Lee from LG Electronics to be chief executive officer and Paul House from Nortel to be chief operating officer.

According to a press release, the LG Electronics Infrastructure business and Nortel's South Korean operations had aggregate revenues of KRW 600 billion (US $530 million) in 2004.

Closing of the transaction is subject to satisfaction of certain conditions, including regulatory and other approvals, and is anticipated by year end. J. P. Morgan advised Nortel and Lehman Brothers and Woori Securities advised LG Electronics in the transaction.

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