Nokia Looking to Tap $2B Credit Facility

By Mark Evans | Published: April 24, 2009

From the interesting file, NokiaSiemens Networks – the company apparently interested in buying Nortel’s wireless assets – is looking to get a three-year, $1.98-billion revolving credit facility.

The proceeds will be used to refinance “certain bilateral facilities” and for general corporate purposes.

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  • bankrupt_bob

    Nokia Networx?

    “Proceeds of the deal, which is being arranged by BNP Paribas ( BNPQY.PK – news – people ) and Nordea, will be used to refinance certain bilateral facilities and for general corporate purposes, the sources added. “

    How interesting that the “arrangements” are being made my another “pink slip” entity! ;>)

  • protosphere

    Even with no mention of Nortel whatsoever, it is certainly Interesting timing. And it is cash, just what Nortel seeks, again, albeit in finale.

    Time is money and they must sell like fast but not that they necessarily will …and so far nothing.

    The bids to date were termed “low” even after failing to sell MENs division for so long and this amount of money is by far beyond what they need if they were interested in only parts of Nortel. I can't see them taking the whole pie. Avaya might have transferred only 200 employees for example.

    I may be wrong but I suspect this money is for other “bilateral” things than specifically making any acquisiton(s) or specifically stating this is what they intended to do in such a large application, let alone trust or know what they were buying.

    I also don't see any other telecom player tripping over their feet to buy Nortel assets to date. Perhaps this kind of money would be better spent to fill any vacuums left after Nortel bites the dust with a more efficient model than acquiring a laggard=)

    Buying Nortel assets in a climate all telecoms are being hit pretty hard does not strike me as likely but I might be wrong =)

    I suspect they need big cash to keep making large deals and for sustainability sake instead. Otherwise, some one close to the situation may have went so far as to speculate with specific terms than followed by no comment by the parties involved. I hope Nortellese is contagious with these ambiguously terms “bilateral facilities” =) Partnering with Putian may be a good example of a “bilateral facility”.=) Perhaps the term acquisition would tip their hand… =)

    I wonder how Nortel's UMTS sold for $300M is coming along with Alcatel-Lucent =)

    Never know though… timing sure is interesting given the WSJ .

    To take extreme speculation even further, could Huawei also be expressing an interest to elicit this action from Noika, not wanting to wait for the trustees hammer at the Chapter 7 fire-auction? Interesting…This would also be a good move to appease creditors too in all fairness… and it is cash they need and not shares…hmmmm…although I doubt it… =)

  • horace_grimswold

    Please post the Cliffs Notes version…lost me after the 10th paragraph…

  • MikeZ_ElPresidente

    My loyal subjects,

    dont believe this rumour. We are making plans to come out of Ch11. Whilst our competitors are choking on 2b dollar loans and acquisitions we will deliver a decisive blow.

    Your president

  • yes4aapl

    To take extreme speculation even further, could Huawei also be
    =====
    re
    I know your extreme speculations in last 5 years turned out to be correct.
    I don't know if this blog is right to post extreme speculation?
    When I pointed out ZTE as getting $15 bill in new credits, every one here ignored that.
    http://www.telecommagazine.com/newsglobe/articl…
    when Nokia gets $2 bill we have a new post.from the host.about that.
    ZTE is traded on stock markets Huawei is not.
    Huawei is a double size of ZTE right now and still growing with 40% ratio each year. It would mean that if ZTE will stop growing next year HW would be 4 times bigger than ZTE….. in other words it's time for ZTE to do the move.

  • NTblinker

    Avaya is an excellent choice for the Nortel bidders:)

    http://www.reuters.com/article/businessNews/idU…

  • NortelEngineer

    If piecess of Nortel are being sold to Nokia for $2b I think should be good news for Nortel. This money can help remaining Nortel to come out of chapter 11. Canada goverment has alrady refused to help so there is no alternative left.
    Am I right or wrong ??

  • NTblinker

    You are wrong! Nortel does not want to come out of Ch11. Because that process is a guard in this tough economy while the rivals are struggling alot without having it.

  • NortelEngineer

    I agree with you that Ch 11 has given enough fexibility to run their bussiness but ch 11 has stopped sales of Nortel devices.
    Multiple projects which had to come to come are gone on hold. Costomers are in wait and watch mode. If Nortel does not come out of chapter 11 soon there will be no Nortel.

  • TongueInCheek

    The Bankruptcy Protection proceedings lets them restructure their debt and Balance Sheet so that it will be healthy at time of exit. The first step towards this is the new Business Plan which I would expect to see over the next few weeks. The Business Plan will show guidance as to what is planned for sale and for retention and how the Income Statement will look.

    Customers will hold major decisions until they too get visibility to the new Business Plan, which is understandable.

  • NTblinker

    Are you sure that ch 11 has stopped sales of Nortel devices? so what's this?

    http://www.marketwatch.com/news/story/nortel-si…

    And also you can find a lot more sale news in NT Press website!

  • NTblinker

    And also it is certain that creditors forced Nortel management to this process to save their money(to be sure credit futures).

  • NortelEngineer

    Existing customres are renewing their contracts bcoz they do not have any other alternative.
    But I can clearly a lot of projects which should have been finalized have cancelled or gone on hold and with time this all will be gone.

  • NortelEngineer

    If sales has not stopped completely I am sureit has atleast 50% down

  • NortelEngineer

    Ur comment is similar to Zmail :-) 'Bussiness Plan' & ' Next few weeks'.
    Any ways my question is if Nortel sales Carrier bussines to Nokia for $1B or 2B is it gud news or bad for Employees/Creditors/pesionairs..

  • TongueInCheek

    I personally think it is good news, depending on which specific pieces of the business are sold. I also want to see parts of Nortel survive with the Nortel name.

    I think Nortel's 2 best Carrier Networks assets are; Carrier Voice and Metro Ethernet/Optical. Who knows if both can survive under the Nortel brand but this would be my personal preference.

  • NortelEngineer

    From the past news it is clear that assests which are going to Nokia are CDMA/LTE/Carrier-VOIP.

    Surprising thing is that why a rich country like Canada can not save its only hight tech company which is paying salary to their 6000 peoples and pension to around 12000.
    If goverment think company is poorly managed they can take control and put new BODs.

  • SleeplessinToronto

    Well, NortelEngineer, your theory is right, but…..

    There is $4.5B of senior debt. Not to mention a/p, taxes, amounts owed to EDC as a senior creditor, executive bonuses to be paid (!!!) and lots of other stuff. And the pension deficits are bigger than anyone thought. If NT is sold in pieces, there won't be a surviving company (or at least not a big enough one) to manage the pension obligations, so I guess they would be wound up by the authorities in each country. The impact of this is huge. NT was previously saying that its UK pension deficit was UK300m or so, but then the accountants came up with a new valuation “on a wind up basis” a few weeks ago (ie, marking the assets to market today as if ithey would all be dumped today instead of continuing to grow) that put it at UK1.3B! I haven't seen similar valuations for the US and Canada, but the direction and magnitude is pretty clear.

    So the bottom line is $2B here and $1B there is still going to leave precious little for unsecured creditors ($0.15 per dollar? less?) to fight over. And if there is a surviving Nortel it will be about the size of your local convenience store.

    As to your assessment that there are no other alternatives, I'm afraid I can't argue with you there, unless you believe in time travel. Maybe if John or Frank (substitute with your favourite villain) was caught in a Groundhog Day loop he would get it right eventually.

  • NTblinker

    Z resigned?. Did anyone get a Z mail recently?

  • scalpcutter

    Strong Rumour is nothing to be retained.

  • scalpcutter

    Big Winners.
    Lawyers.
    Board of Directors.
    Execs and employees in line for kerp, keip and restructuring bonuses.
    Provincial gov't EI claim processors.

    Winners
    Employees who survive the transfer to the new owner. This could be but a short term reprieve for these people depending how they fit into the new plans, but a temporary win nonetheless in these times.
    The good nortel products that will survice and flourish with new ownership, capital investment and inside leads/influence for more business.
    The buyers who buy the business units. Surely they will get a good deal?

    Big Losers
    Creditors (includes big creditors, ex employees and pensioners).
    Soon to be Ex Employees laid off before the line of business they are in is transferred, if that even happens.
    Dalton McGuinty. Just had to throw that one in.
    Autoworkers got a sweet deal. Concessions didn't touch base pay or benefits. Paid summer vacation. More bailout money to come since they made concessions with regards to perks that even professionals don't have.
    McGuinty will declare it a victory for the Ontario Economy.

  • NTblinker

    I cannot wait just a second, you said a few weeks:) you must be kidding! I am waiting a few NEWs in next week.

  • NTblinker

    Some people in an earlier thread had said that there wouldn't be any business plan for that day or ever.

  • Lookahead

    that would be only a ray of light shed into this long Nortel dark tunnel leading to the doom.

  • nortel_ottawa

    nope… if you have the Zmail stating MikeZ is resigning, could you plz post it? I think the only way mikez will resign is what Happily_Retired_Cisco_Exec said..

  • horace_grimswold

    Looking at the Nortel clusterbomb, Mikey is nearing his 1 year anniversary of his announcement to shut down the Calgary facility. GM can shut down its thousand-employee factories in a heartbeat, why does Calgary still have a pulse?

  • ExNtrl

    Calgary is deceased. My understanding is the last few employees were shooed out of the facility and the facility is closed. The wake is being held shortly. The reason Calgary was hard to kill was that is where CDMA, Cost Reduction and Enterprise (BCM, Norstar with associated peripherals and telset) support was housed. Hmmm….interesting they shut down the main areas that used to make money.

    The question to now ask is why is Bellville and Ottawa still open and not outsourced to India/China along with some of the other smaller sites?

  • ExNtrl

    May I get that in paper form please? Running short on toilet paper :D

  • PM_Guy

    The 8th Monitor's report is out. Nortel is requesting a stay until July 30th to develop is restructuring plan. This is an extension from the original May 1 stay.

    I guess we will all have to suffer a few more months before we know what is going to happen.

  • NextOnTheList

    In the “Winners” list, you forgot to mention Nortel employees who found another job and finally got out of this depressing downward spiral.

    And if they regained the sense of their life, then they deserve to be listed as “Big winners” as money is not everything.

  • NTblinker
  • NTblinker

    no, i am just wondering where he is now, what's he doing at the moment. We couldn't get an lastly updated mail from him.

  • NTblinker

    No wait anymore, it is seen that this process will extend more and more. No business plan too.

  • horace_grimswold

    Moral of the story: hard toil at Nortel leads to hard times.

    I recall hearing when Mikey stuck the McKinsey bulldogs onto rejigging the BCM platform: what a way to butcher their top seller. Chainsaw artisans at work.

    Hearing that NT-Calgary was still operational as of December, I speculated that (aside from Mike Z's inability to execute on decisions) NSN would scoop up the NT Calgary team as the squadron for sustaining CDMA for Verizon. That won't be happening now.

    Note to any NSN exec's: if you are toying with the idea of buying NT assets, do you know what you're getting into? Caveat emptor!!!!

  • horace_grimswold

    Note to all employees who have not jumped ship yet: time is money. Nortel is wasting your time.

    No one is coming to save you.

    There is no golden parachute awaiting, just a hard landing.

    Take control of your exit strategy, do something, and go to bed each night with a clean conscience about your career.

  • less

    aca

  • scalpcutter

    Money indeed is not everything, but that's only if you have lots of it, or more than enough to not worry about it. So I would only classify people who left and found another job asd Big winners if they fit into those categories.
    I would add however also define a Big Winner as someone who left and found more money and more security.

  • scalpcutter

    If that is true they must be figuring out what to do with wireless?
    This can only mean they are entertaining the idea of keeping wireless.
    Rumour is Joels Enterprise and MEN are sold with deals to be announced within a few weeks.
    Apparently there is a new rumour every 15 minutes at Nortel.

  • silentwatcher

    Here is another rumor. Rumor has it that only Nortel's LTE may no longer be with NT soon. People are getting notified as we speak. So perhaps expect a Zmail stating that we have decided to put all our eggs on 5G and we will be an industry leader in that and we will directly transition our GSM and CDMA customers to 5G directly and ofcourse thank you for all that your are doing for NT.

  • TongueInCheek

    Not quite according to this news story from Calgary…

    http://www.660news.com/news/local/more.jsp?cont…

    Council set to vote on police headquarters
    Lisa Grant, Pete Curtis and Alicia Hope-Ross | Saturday, April 25th, 2009 11:18 am

    City council will hold an in-camera vote Monday on a $125 million proposal to buy the Nortel Networks building at McKnight and 40th Street N.E. as its new police headquarters.

    A city committee approved the plan last week and according to one source, Nortel has more or less agreed to the deal as well. However, there is a caveat. Nortel filed for bankruptcy in January, and asset sales have to be approved by an Ontario court.

    According to The Herald, the site should be vacant by June.

    The 23.8 hectare location is being considered for a number of reasons. The huge building would be the site of headquarters, labs and a criminal operations centre. Any undeveloped land could be used for expansion, or sold off.

  • protosphere

    Noika wants extend reach as Nortel's footprint is shrinking /Carrier spending on the decline. Others used for LTE, etc…

    Why are bids to date termed “low”? Relative to what? What is losing money worth?

    Noika is interested in LTE?
    Verizon, their largest customer, plans to build LTE with Ericsson and Alcatel-Lucent instead:
    http://news.vzw.com/news/2009/02/pr2009-02-18.html

    Sprint used others for long boasted WiMax they “derisk” like LTE, like long boasted Putian used Noika, nothing from BT's intial tender using everyone but them, Ericsson even cleaned up Nortel's faulty gear with BSNL's lost leader, etc… leading to this bankruptcy after exhausting selling assets and printing billions in Nortel paper while losing money.

    Look how many others could buy Nortel with cash, without breaking a sweat or financing. Why don't they to date?

    No one pays for a white elephant like Radware under the excuse of increased reach when Nortel paid billions for a declining asset they sold for peanuts, 2 digit millions. Of course this is relatively “low ” in all fairness but neglects worth of their other assets in Noika's case. Even if they knew or could trust what they were buying with Nortel's stellar forecasting, numbers, and plans.

    Orders are not growing with stalled compounding interest growing, stalled severances they never could afford, their largest pension deficit growing, and debt to cash ratio widening by the day, etc… They need cash, and time is money… shareholders near zero nothing to dilute and gagged employees shown pension/ severance waivers are thanked… and nothing sold to date.

    Again, Carrier isn't exactly growing to justify financing it. And forget reach with LTE given their largest customer. Enterprise bids are “low” compared to what… and well… you get the drift.

  • TongueInCheek

    We need to remember the basic differences in CCAA Law and Chapter-11 Law. In Chapter-11 there is no such thing as a Stay Deadline or Stay Extensions. In Chapter-11 the Stay Period is granted for the duration of the proceedings. In CCAA Law, there is a Stay Deadline (currently May 1st) and The Debtors are required under law to request extensions if required.

    The US Courts are scheduling hearings etc for dates beyond the current May 1st Stay period. As well, in Canada the judge hasn't made a ruling yet on the Legal Firm representing Ex-Employees and Pensioners.

    Given this, a Stay Extension Request would be required to ensure equality across th two jurisdictions.

  • less

    Whats that mean – “12 -18 months” from when, now? August 31st?

  • protosphere

    When will costs for operations runs out?

  • protosphere

    Don't sweat the small stuff.

    I disagree we “need to remember” a thing, past their history to current state perhaps.

    Bankruptcy by definition means worthless, end of story.

  • protosphere

    Will the sale cover their bonuses =)

  • protosphere

    Calgary:
    “will be completely closed in 2009.”
    “Most of the site's (400) employees are involved in research and development.”
    “people will be losing their jobs”

    in the UK and US too as France protests, as did our Premier and as they circumvent creditors for bonuses

    add severances, pensions, compound interest, legal fees, and other costs to wind down operations as unsecured creditors list grows with so few assets to go around even if they could be sold.

  • NTblinker

    I would like to explain the romour cycle.
    - One looks AAN to see if there is news about Nortel then
    - After reading the posts, he/she tell rumours to other persons (including AAN readers and posters).
    - The managers hear some of this rumours and think what will be happened to employees and himself/herself then make a brainstorming and at the end come to an idea, tell them to employees and lately the employees share their hearings via this platform. Namely we generate the rumours then we hear the same rumors from other persons who heard them from us. That's all, we are guilty!

  • NTblinker

    I think we missed 7G, ought to chase 8G instead:)

  • protosphere

    Green CEO and those with who he holds close relationships aren't going anywhere at this late stage.

    This was a “hard to fill position” to begin with =)

    If he did, would he and his pals file to be on the unsecured creditors list? =) Somehow, I bet they would =)

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