UBS analyst Nikos Theodosopoulos believes it might make sense for Nortel to seek bankruptcy protection sooner rather than later.
In a research report, “Nortel: January bankruptcy filing?”, Theodosopoulos said declaring bankruptcy in January “may make sense to maximize franchise value”, and allow the company to avoid an interest payment of $100-million to $120-million due on Jan. 15.
“We believe a likely challenging 4Q08, weakening 09 outlook and tightening DIP financing may cause Nortel to withhold its interest payment and possibly pursue an early bankruptcy,” he says.
Source: NetworkWorld
1. Declare chapter 11. Hire consultants to deal with the paper work and to represent NT before the bankrupcy judge.
2. Layoff a majority of remaining employees without severance. Hire consultants to write the no-severane layoff notice sent to employees.
3. Tell the pensioners they are out of luck. Hire a consulting firm that specializes in this sort of wet work.
4. Pay off any lawyers and consultants who have not yet been handsomely paid.
5. Pay off the bond holder's with the minimum amount allowed under the code.
6. Pay off the preferred-stock holders.
7. Emerge from chapter 11 with as much of the 2.6 billion in cash left as possible.
8. Grant stock options to all the leaders in the new NTP(NorTel Post-bankruptcy) shares. These options are incentives to keep key leaders at Nortel during this tough transition.
9. Send a memo to the few regular employees that are left that they should be extra vigilant in their use of offices supplies. Also under no circumstances should they be taking pens or pencils home. New security search procedures to be implemented to facilitate this world class asset preservation program. Hire Blackwater to consult on this project.
10.NTP(NorTel Post-bankruptcy) is ready to be the acquisition target of a major competitor (preferably one in China. The leadership likes to vacation there.)
11. Hire some consultants to help negotiate and take care of the merger mechanics. Merger price of the NTP shares is very negiotiable. Just make sure the leadership stock options are in the money.
12. Make sure the merger terms include enhanced retirement packages for all the leaders (i.e. Bill Owens size packages). Hire executive compenstation consultants to help with this.
13. Plan for Big merit bonuses for all the leaders. Having successfully navigated the company through bankruptcy and a merger its time for another big payday. Throw in a new horse for Pavi (is Midnight Lute up for sale?)
14. Hire some consultants to organize retirement parties for all the execs who are now ready to "move on". Plan to have Jack Welch jump out of a cake at Mike Z's party.
15. Enjoy retirement until one of the Gang gets on with some other company and gives the signal for the rest to come in and work some more six-sigma magic.
StillatNT
Anyone know what happens to the employee's if Nortel goes bankrupt? Do they continue to get paid for some period of time? Do they get layed off with or without a severance package? Is the pension safe? This must have happened before to a Canadian company?
Nortel watcher
Still, Of course employees continue to get paid, especially those in the Accounting dept. Kidding aside, considering that NT implements a significant time lag between layoff announcements and actual empty desks resulting from those announcements, I wouldn't lose any sleep on the matter when mgmt and the BoD finally declare BK. As for suppliers and other creditors, that is a different story.
I'm not an expert but common sense tells me that severance would be significantly less during BK including for upper mgmt as their contracts could be deemed void. The pension fund is insured but may be conditional up to a certain amount.
MrReal
I doubt that motivation for ch11 filing would be an interest payment. The filing is the line in the sand separating the time where shareholders own the company and the time where debt holders own the company. It would therefore make sense that debt holders would want such line to be drawn, not the shareholders. Since debt holders aren't the ones who will draw the line because they don't want to get the interest payment coming to them. They would much rather get that interest payment first and then draw the line. So unless this is a situation where you have senior debt holders pushing for it because the payment is coming to junior debt holders (and i don't believe that's the situation here) this line of thinking leads nowhere. Having said that, there are other reasons why debt holders would want to push NT into BK asap. Mostly because NT continues to burn cash.
fxfxfx
Mark E: Your website became totally useless now as the amount of rich discussions are over. NT employees (or under severance package) are afraid of retaliation, thus they wont post if they have to sign up/
Anyway, you will have to pick another company as NT will be gone by Jan 15th. Unfortunately the sale to NSN went dead... BK is the only exit now... Enterprise is now for sale.
The CFO is running NT as MZ has been asked to take a seat on the second row.
bye
yes4aapl
Mark E: Your website became totally useless now as the amount of rich discussions are over. NT employees (or under severance package) are afraid of retaliation, thus they wont post if they have to sign up/
Anyway, you will have to pick another company as NT will be gone by Jan 15th. Unfortunately the sale to NSN went dead... BK is the only exit now... Enterprise is now for sale.
The CFO is running NT as MZ has been asked to take a seat on the second row.
bye ---- re OK this post has been here for a while Let us look at that post again the post says CEO is replaced by CFO and acquisitions failed Why don't you guys try to make that guy run away as a liar or just speculate that he is right? Is that blog for discussion or just to post Nortel's propaganda and rumors? Let me tell you, Mark Evans was wrong in that post attacking Mark Sue for his target of Zero for NT stock! The stock is almost there! Mark Evans was wrong about IBM acquisition, the rumors, and Mark Evans has not admitted it yet! I wonder how it was possible Mark Evans posted the IBM rumor? Mark, open your eyes, who pulled your leg on that? I told you so few hours after you posted that crap! O yes, post more of The Psychiatrist nonsense here and we all'l be sick!
Should_have_Sold_in_Feb_2004
Okay, ya, great...book value of NT shareholders is at minimum $10B. Go ahead, take another $10B of peope's REAL money out of the economy.
REALLY SMART...great for CANADA and the world economy....RIGHT!!!!!!!
TURN IT AROUND AND MAKE OUR MONEY BACK!!!!|
DO NOT FILE FOR BK!!!!! THINGS WERE WAY WORSE IN 01 and 02!!!!!
yes4aapl
So we have first date speculations. for BK Jan 15 2009
I don't agree with the reason as there are bigger problems than paying interest but the time is right. Btw readers of AAN know that Nortel ‘s been prepared to use BK as we did read about that here. How long it would take to destroy all assets if ...Nortel was not pushed into BK? Selling MEN for cash would not fix Nortel's cash problem, as at this time Mike does not know what to do. When first estimated in September MEN was of value about $800 mill. Since then the value has collapsed with the stock collapsing. Just this week NT stock lost another 50%! Mike's Z Turn around Plan was good only for Mike and is in the trash basket now!! The new plan from Nov 10 does not address collapsing revenues_new orders! Kris Thompson was right when he said """""" Filing for bankruptcy protection would enable Nortel to renegotiate with suppliers and leaseholders and perhaps get a government waiver on funding a pension deficit. It would also let the company offer bondholders a deal where they receive a combination of cash and new equity, but common shareholders would be left out in the cold. http://www.theglobeandmail.com/servlet/A...
protospherical1
With the advantage of retaining capital to compete with what restructured? With the disadvantage to shareholders, customers, management, taxpayers etc... Damned if they do, damned if they don't?
Nikos: Bankruptcy Protection Has Appeal
UBS analyst Nikos Theodosopoulos believes it might make sense for Nortel to seek bankruptcy protection sooner rather than later.
In a research report, “Nortel: January bankruptcy filing?”, Theodosopoulos said declaring bankruptcy in January “may make sense to maximize franchise value”, and allow the company to avoid an interest payment of $100-million to $120-million due on Jan. 15.
“We believe a likely challenging 4Q08, weakening 09 outlook and tightening DIP financing may cause Nortel to withhold its interest payment and possibly pursue an early bankruptcy,” he says.
Source: NetworkWorld
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