A Bid to Save Nortel?

Hilarious, isn't it? The gall of guys like Z and Owens, wanting millions in "pensions" for a couple of years of work where their results were about as bad as could be imagined.

For Mike Z, they should counter-claim back the $9 million or so that he took from Motorola to NOT work for competition, and he broke his word and went to Nortel anyway - who's stupid board kindly paid it all back to him, plus "sign on bonus" (whatever that is).

He's putting in an amibit incredibly high claim, so the pennies to the dollar he might get at the end of all this add up higher. I hope Karma exists, and hits him full on here...

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Anyone who thinks a vultue capital group would be better for employees than an established player like NSN is smoking some seriously strong stuff.

We have already had one Vulture named Mike, we don't need more Vultures from MatlinPatterson. There is no hope for employees with Vultures in charge. There would only be a continuation of the hollowing out that Mike Z has been working at. Mike Z has already been doing what Vulture firms do.

Emerging from creditor protection is a pipe dream at this point. It is much better to let the creative destruction portion out viable pieces to viable companies than dream of resurrecting this corpse.

A strong company like NSN can take on one weakened pieces of Nortel and nurture it back to health.

But the gravely ill pieces of Nortel can not support each other even with new cash infusion, it would just be pouring money down the drain and prolonging the death march of employees, though I am sure it would immediately result in the flight of more key individuals.

Nortel is dead as an operating entity. The only concern now is rescuing the maximum number of employees from this sinking ship. That rescue only comes in the form of lifeboats like the one from NSN, not new bailing buckets from MatlinPatterson . Most of us are sick of bailing, we want the lifeboats, especially if we can leave behind the back stabbing executive management team as we sail away.

Nortel in Asia is a sinking ship.

MatlinPatterson Global Advisors representing creditors with Save Nortel group would have strong coalition to do restructuring and emerging from BK.
It's much better proposition for all stakeholders but not so good for hated current BoD and Managers represented by Mike Z.
I guess the fight is about exit packages for the ELT /fat cats/
They don't care about employees or the Nortel name.

>They don't care about employees or the Nortel name

Doesn't the Canadian government have a say in the sale? I thought the previous press releases seem to imply that any deal will also have to be blessed by the Canadian government. If this is true, then they may be forced to play fair (atleast for some initial period).

Nortel has become political issue in 2004 or earlier...in my opinion
Gov is partially responsible for what happened and current Gov tries to stay away from the issue.
Nortel's BOD and Mike Z have been ignored by current Gov. /see Dec talks and Parliament Hill's summon/
In return BoD and Mike think that they can do whatever they want to, that's the fire sale of assets in action.
As you've mentioned before, you don't believe Nortel can be restructured.
All the signs show that it's exactly what Gov thinks based on the Gov knowledge of Nortel's culture /past/
CH11 protection law protects current BoD and Mike's team, so they have been cashing on that regardless of suffering of all the stakeholders.
Shareholders who supposed to get rid of Directors and Mike Z have no say at all.
Why?

We are supporting MatlinPatterson, they may buy not only CDMA but also enterprise as well, Go guys, defeat them!

Who is 'we'? Can you please be more specific?

Outsourced world of Nortels:)

The story is mixed up and mistaken.

MatlinPatterson is already a top Nortel investor/creditor, and they along with other creditors are objecting to current procedures and sale to NSN of wireless.

They are not considering buying everything(in anything credible that I have read), they are trying to find someone else to inject money so they can get theirs back.

Here is the info in proper context:
http://www.reuters.com/article/technologyNews/idUSTRE55P6DJ20090627

http://www.ottawacitizen.com/Business/vulture+fund+eyeing+Nortel/1748765/story.html

This link is more understandable, updated and clear!

they are the money injectors, they have not to look for someone else to do that.:)

What if all the CDMA/LTE employees were to sign a petition against MattlinPatterson vulture venture? Would it make any difference w.r.t. what happens to the CDMA/LTE chapter 11 sale decision? Can the sheep rebel against the butchers?

Nortel pieces would be sold out and concerned employees would be transferred but do u think about NBS and similar groups.

Don’t be selfish. Better if Nortel can be saved


.

Let’s put our thinking caps on folks. How comfortable do you think Tier 1 customers (or other customers for that matter) would be with a Vulture?

More to the point, would the current high level execs stay in charge? I feel that this will not inspire confidence in our customers as I feel they have failed the company.

Would the same mistakes be made and we repeat this whole debacle in two years?

"MatlinPatterson is looking very seriously at the possibility of supporting a Chapter 11 plan rather than the fire sale," said the attorney, who is with the firm of Bracewell & Giuliani.

Nortel argued against delaying the key sale on the grounds that the business had been shopped for months before it signed an opening bidder deal with NokiaSiemens.

"There's a thin line between being a bona fide bidder and being an irresponsible tease," said Nortel attorney James Bromley, of Cleary Gottlieb Steen & Hamilton LLP.
.......................................................................................
OK... Let me get this straight... A Nortel lawyer speaks out against a possible bid and undermines the possibility of saving Nortel.
Exactly who are you working for Mr. James Bromley and what is your end game?
Something really stinks about all this... Sell it in pieces come hell or high water... so I can get my bonus check at the door.
RCMP... are you wathing this?... cause you should be...

Our last chance,
"MatlinPatterson Global Advisors, a $9-billion private equity investor"

Buy CDMA very pleases!!

You moron... this would be your last chance indeed...b4 ur job gets shipped off to China/India. Read up on these vulture funds first.

Please save us...

The Nortel BoD is only interested in THEMSELVES.

That is how we got here in the first place.

That is why they will do NOTHING to save Nortel.

For them, the mission now is: get as much money for themselves from the carcass of Nortel, while hiding behind bankrupty law, and get it done and GET OUT as quickly as possible.

Their last respective acts, after siphoning off whatever cash they can, will be to try to SPIN their actions/inactions while on the Nortel board, so they can weasel their way onto the next Board-gig at another company and do it all over again.

They are all already using the economic downturn as The Big Excuse.

Great work, if you can get it (and are soul-less).

MC

Most times companies use "the economic down turn" as an excuse its because the financial fundamentals of thier companies (Cost of capital, debt/equity structure, strategy, leadership etc...) were on shacky ground to begin with. Then you must go back to the "good times" and look for the signs so as to learn from the experience.

History has demonstrated that it is the downturns that exposes the structure and lack of fundamentals.

Knowing this I would agree with the leadership team who uses this excuse because what it says is that they didn't lead......

Well put MC

Mike Zee has it in his best interests to ensure that Nortel fails. He can thereby blame "external forces" for its demise and preserve his career reputation.

Imagine for a second that somebody fished Nortel out of bankruptcy and made it into a viable company. Mike Zee would look like a royal buffoon, and would be validated as a failure.

He would never be employable anywhere else ever again.

"Force majeure" at Nortel will probably allow Mike to live another day and take his wrecking ball to a future career.

re
"Imagine for a second that somebody fished Nortel out of bankruptcy and made it into a viable company. Mike Zee would look like a royal buffoon, and would be validated as a failure".
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That would be the most awesome thing that could happen, karma exemplified, the correct person(s) get the scarlet letter and employees and shareholders have a chance at vindication.
Skim the scum off o' the top, and get back to business.. Probably a pipe dream but it's hard to give up all your dreams..

This might prove interesting to exposure cause and effect to the largest bankruptcies.

There are many swindlers like Madoff, Cendant, Tyco, Warner Bros, etc... and it is interesting to see how they create the largest bankruptcies:


http://finance.sympatico.msn.ca/SavingsDebt/the-world%27s-biggest-bankruptcies.aspx?dub-gallery-photo-number=1


World's largest bankruptcies:

1-Nortel Networks Corp (Fraud charges pending on both sides of border)
2-Lehman Brothers (sub-prime mortgage sales)
3-WorldCom (company officials were cooking the books to hide declining earnings.)
4-Barings Bank (fraudulent activities)
5-Bre-X Minerals Ltd. (investors were scammed.)
6-Bear Stearns (attributed to a lack of investor confidence after rumours swirled about its liquidity crisis. )
7-Enron (company’s finances were fraudulent)
8-Global Crossing Limited (Lavish executive spending – from private jets 9-and exorbitant property deals to multi-million dollar bonuses and a $15 million Picasso painting – is where the trouble started for telecommunications company Global Crossing.-investors lost confidence )

Any feeling that nortel would be saved is burning you.

lol

Have to agree about wondering why and how the hell the exec team - inparticular the CEO - are still there. I've not heard of any CEO hanging around like this after chapt 11. No doubt there are a few, but in most cases they're out in weeks. ONe can only wonder what The Z has up his sleeve.... dare we guess it's a multi-million payout? He'll have to get a second bank account, he can't have spent his multi-million sign-up bonus yet :-))

"MatlinPatterson scored a 450-per-cent return in 2007 on Huntsman, a Texas chemical company, after putting in $500 million when the company was close to liquidation five years earlier. It also helped pull the bankrupt and disgraced Worldcom out of insolvency as MCI, a company that was ultimately sold to Verizon for $6.7 billion."

If they can do anything close with Nortel, this is something that should be looked at.

Teleguy

You REALLY need to do better research. The Huntsman profit was earned in the Delaware Chancellory Court as the result of a lawsuit. MP is a legal firm in private equity garb.

Milan

Get them to sue Cisco over its equipment using 30% more electricity than Nortel's. That seemed to be a big deal just a few months ago.

Given the way the Canadian Federal and provincial gov'ts have done absolutely nothing (well done Steve, Dalton, John, Tony and Iggy) to this point you can be sure they won't stand in the way of this, even if it means widespread sacking of pretty well all the canadian nortel workforce that is left.
The EDC carrot on the stick is a short term bandaid pittance that really does nothing. I would expect the vultures to succeed. John is probably encouraging them.

>even if it means widespread sacking of pretty well all the canadian nortel workforce that is left.

How many in the canadian nortel workforce that is left? 2,000? 5,000?

I would guess maybe 5,000?
Just a guess though.
The fact remains Nortel is a Canadian Company.
Canadian employees should be the very last to go and should be the most protected with as much help as is necessary from the gov't to ensure that. The canadian government has turned its back on its own and as I've said before is only interested in helping other countries or disadvantaged new immigrants. They may not even be disadvantaged and you would not know it with the family sizes they have, but they give the perception they are and take courses so they know how to fool the dumb canucks who faithfully obey turdos charter no matter how wrong it is. So long Nortel canadian employees if the turkey buzzard swoops in and good luck keeping your jobs with your new acquirer.

Nortel is (was) an important corporation in Canada for sure. But I object to the idea that it is a 'Canadian company'. Are the majority of shareholders Canadian? No. Are the majority of creditors Canadian? No.

So explain to me why "Canadian employees should be the very last to go and should be the most protected with as much help as is necessary from the gov't to ensure that."

You do not want these guys bidding to "Save" Nortel. These guys are famous for there activities to strip down a company and sell it off. They are looking to maximize the return on the 400 million in bonds they hold. As others have pointed out, these guys come in, strip staff to the bare bones, and then try to sell the pieces that are left.

Back in 2007 I remember a call with Z, where he mentioned he had to go to the credit sharks to get more financing for Nortel. You can probably see that there has been a long on-going battle between MatlinPatterson and the Nortel BoD/ELT for a while.

At least the businesses that get sold off have a chance to survive with the most people intact. If MatlinPatterson does it, expect more Nortel blue to be spilled.

Lest be vary weary when a vulture firm runs your shop. The word Hostile comes to mind.

In able for them to do that, they would have to get more than they paid for it to even salvage a higher value for their bonds.

I was thinking more along the lines of taking it over entirely and making it profitable with a longer term view, with an entirely new management team, otherwise even NSN would be a preferred bidder, so you may be right if this is the case in light of their history. Given their extensive participation with the airlines I was hoping this was not the case.

Again, you may be right if they were to fatten the pig for slaughter too.

I hope MatlinPatterson buys it all and straightens out the entire mess with good people in place, not what Nortel calls "good people" of insiders only and tyrants prioritizing bonuses over innovation while cutting severances to hype contradictions.

If the EDC gives them the same support, why the heck not. I don't trust the Siemens part of the Noika-Siemens venture from inception if you will kindly excuse my strong bias towards their management.

Keeping my fingers crossed to save Nortel souls, the very foundation of innovation, many Canadians vested their life capital to support and grow with. Lets hope most employees at least they some survive the past carnage under better leadership.

Who cares if they are smaller entity so long as they are profitable with the hope of future growth after such a total, total mess to a degree of overkill.

Maybe they will even lead again somewhere, some day, and I see no reason why not. =) Under a different name of course.

I can see now why everyone was cursing the board and management relative to others, any others with a shred of decency. Any others than past bean counter ninjas or big business big shots lacking telecom experience and strategy than justifying their pay for their talent, regardless of outcome.

Given MatlinPatterson would vest over 10% of their net worth, it will be a substantial venture even for them. Lets hope they get it right BEYOND ALL ODDS this time. If not let me run it, I will =)

I like the sounds of this one for once... and it's been years =)

MatlinPatterson is not interested in any R&D. They would certainly not want LTE. All they want is to either CDMA bid and sustain it to its end of life, wittling away at headcount as the product declines or at least bid up the price so that NSN doesn't get away with a steal. NSN's current bid is only approx. one year's profit for CDMA which means Nortel could restructure (i.e. wack any R&D folks not needed for sustainment) and run the CDMA project for 2 years and make almost double what NSN has offered. MatlinPatterson had a valid beef that the bidding process was not likely to bring the price up much seeing as Alcatel-Lucent would likely be blocked by non-competition laws and Huawei blocked by national security concerns. It appears that the courts have responded to MatlinPatterson's objection to the bid in the right way -- If you are so concerned, put in a bid yourselves -- That's a tall order on short notice but I'm hoping they are able to come in with a bid just to force NSN to pay a decent price. I do not imagine that NSN's bid is their final offer and I don't imagine that MatlinPatterson would be able to match what NSN is really willing to pay.

You like the fact that there won't be anymore nortel employees in Canada?

No!

Not at all.

I would like them to be happier, to see them with an honorable company that values them as much as their very business and pays severances.

liar liar liar ..... lol

Perhaps I should say that "you like the fact that future ex nortel employees who have moved to the new buyer or private equity group will all be shortly unemployed shortly thereafter the vulture lands"?

Well, this was not what I was anticipating, albeit I may be wrong.

Like I said they would have to pay more for it than their return if they weren't serious about turning it around or restructuring it right. I can't see this board and management having any further participation either. If sharks must run the show, so be it, the company will be strong and stable before they sell I figure and the employees might prosper under a different name. A lot have to go too, like throwing a fistful of tar in sand for those still there unfortunately, how do we save souls in no mans land.

Again, I may be wrong but I can't see why they would bid only cut more only to sell it. After all, Nortel already tried that.

At this point, Mike Zee WANTS Nortel to fail and be dissolved. That way he can move on and blame "external forces" beyond his control for Nortel's demise.

Imagine if a true leader SAVED Nortel and fished it out of bankruptcy. Mike Z would look like a royal idiot and the worst CEO in the telecomm industry (which he, in fact, is). He would never be able to get another job.

That's why it's in Mike Zee's best interest to ensure Nortel's hasty and wreckless demise. All for keeping his image in good standing and blaming the earth for already being scorched.

>If Nortel’s board had any chutzpah, they would consider giving another senior management team a shot of remaking Nortel instead of letting it blown up into smithereens

Too late for this. The damage is done. Talking to customers, they have no confidence in our financial viability and are not willing to take any further risk on next gen products (e.g. LTE contacts in Verizon). From the employee perspective, most folks I know about are severly demoralised, and have no confidence in the re-emergence of Nortel as a whole.

With MatlinPatterson, the vulture capitalists, its only going to get much much worse for all before it starts getting better. These folks are ruthless costcutters with primary affiliation to money, and we will see continuous layoffs, and all the remaining Canadian/US jobs being shipped offshore for maximizing profits.

BTW, an interesting piece of information from the court proceeding this week is that Judge Kevin Gross has modified the bidding process, including making the reorganization of Nortel as well as the sale of all assets acceptable bidding options.

Wonder how this plays out at the end: does MatlinPattersons total bid have to exceed the sum total of all the individual bids for assets? Are there any other criteria which will be used such as preservation of jobs etc?

In any case, even if MattlinPatterson does not win the bid, their bid will force larger bids from all individual asset sales. However, as a majority debt holder, this will help MattlinPatterson, by recovering more $$ on their Nortel vulture bond foray.

Does anyone know where we can get info on how many cents on the dollar did MattlinPatterson acquire the Nortel $400 Million bonds for?

I think a solution like Obama produced for GM may work.Government should take control,provide a bail-out package,transfer the non-toxic assets to a new company and of course sack the whole management.
The government would own the majority of shares until the new company grow enough and then give shares back to current shareholders.This plan may still involve sale of some assets but this way the value gained from the sales will be maximized.Only government have the power to revive Nortel.They shouldn't have forsaked this giant. :(

You heard clement and dalton.
They are not interested.
They smirked with arrogance when they told mikey to take a hike.
What were the exact words? Something to the effect "nortel will not be getting any assistance or help from the government"?
I am sure someone can post the direct quote from Clementine.

I think one of the major problems that plague Nortel at this time is the fact that since they have announced bankruptcy protection and now a potential outright liquidation of all their business lines,this has caused concern with many of their customers and are resulting in customer defection and at the very least suspension of spending by customers until some kind of clarity can be brought to the situation.

This in of itself is evidence of very poor management thinking and quite frankly stupidity on the part of all management.As a consequence of their lack of execution for a restructrued Nortel or a speedy sell off of some business units,overall revenue has declined dramatically only intensifying customer uncertainty,which is resulting in loss of confidence by parties interested in acquiring some of Nortel's businesses and thus depleting the value of those assets daily.

If current management were truly experienced leaders they would have been able to foresee the chaos that is involved with trying to sell Nortel assets under present circumstances,yet show no shame with their mentality of self entitlement involving bonus money.

If Matlin's vulture fund does end up acquiring all of Nortel,I don't think it would make much of a difference to Nortel employees in the near term since there are alot of complexities in the way Nortel is structured.If anything I would think that it could work out better for current employees because even though Matlin has a history of slashing costs to achieve a viable outcome with intentions of selling it for profit,if they decide to oversee the cost cutting it may take longer for them to sift through Nortel than it would for a company like Nokia/Siemens,as they may want to create stand alone viable businesses that would have less overlap than if competitors acquired those various businesses,thus resulting in potentiall fewer overall layoffs for current Nortel employees .

The show which Mike Z has created since BK Jan 14 is exposing not only his crooked character but also low IQ
Go back to business school Mike Z or retire!
Wasting billions of $$$ and making life miserable for all involved is not a fanny game! I'd invite The psychiatrist posting on the board to do examination as well. I think he would find something in Mike Z and would be able to prescribe proper medicine. I don't know how those who lost billions on NT stock are handling the show?
It looks like life in 1920s with simplified solutions was brutal but saved tons of paper in documentations to get justice for crooks. In Nortel's case, prosecution said, it has 20 mill pages of documents to prove that F Dunn and Co are criminals.
Let's see that show! It's coming soon.

the real answer as to what was behind current management's decision to file for chapter 11 protection even with $2..4 billion on its books at the time lies in whether or not their major creditors actually forced them or strongly suggested they go that route.Personally I feel that current management have showed very poor judgement by way of not anticipating the consequences of heightened concern with their customers and as a result a dramatic drop of in revenue which is clearly above and beyond the overall economic factors.

While it is possible that these consequences could have been overlooked by Nortel's leaders,it would then shock me to know that Nortel's creditors could be as stupid to actually agree that filing for chapter 11 was the right strategy considering the consequences that have followed since.

In other words this would demonstrate that Nortel's creditors were dumb enough to think that it was better for Nortel to file for chapter 11 protection because they were concerned that Nortel wasn't going to make that $100 million dollar interest payment back in January and thought that if Nortel undergoes bankruptcy protection they would have a better chance at recovering their debt.

So now looking back it would have been smarter for Nortel's creditors to allow Nortel to miss an that interest payment of $100 million and offer them a more favourable longerterm plan on their debt,as now not only did they miss that interest payment,but
the way things are going they will be lucky to get all of their money back,as it has been previously mentioned that Nortel's businesses would probabaly not fetch more than $2 billion in total.

So this amount with their cash on the books would total the $4.5 billion that Nortel owes,not counting any pension and severance payments to employees past and present.

Legally they have high priority to recover their money,but it does leave many employees without severance and related benefits such as medicare and pension benefits once they have collected their money under these circumstances.

Actually with all that being said it is quite possible that it was Nortel's creditors who may have calculated and forced Nortel to file for chapter 11 predicting that they would even under current circumstance would recover all or most of their debt money,and may also explain how the outrageous idea of KEIP bonuses have been approved by the courts knowing that ultimately all or most of the people getting thses bonuses would no longer be around since Nortel was going to be sold off piece by piece.

The KEIP bonuses would then be kind of ironic wouldn't they.

In other words if that indeed is what transpires,then it will prove that Mike Z and the rest of management never really had intentions of restructuring Nortel.

I think a thorough investigation would uncover this fact,however it would not result in any problems for Nortel's creditors,but would prove that Nortel's current management lied about "wanting to restructure Nortel once and for all" as Mike Z has been quoted as saying.

re
You've got many good points here
I just want to add my 2 C that Pension deficit and obligations were the trigger for BK.
Nortel would not go to the gov in Nov-Dec08 to ask for bail out to pay creditors.
There is more logic to ask for money or ease obligations for the Pension Plan
My posts before BK were talking about that... Pension Plan deficit ballooned to the $3 bill or more and the current law requires right away solution, partial payments and Plan to eliminate the deficit. I guess Nortel had neither one and chose creditor protection including protection from the Pension Plan obligations. Lets say Nortel wanted to address Pension deficit. How much money Nortel would have to use right away? $1 bill? I think so.
$100 mill to pay interest on debt would not sink Nortel in Jan09.

Get your popcorn ready!!