The Fight for Nortel

By Mark Evans | Published: July 7, 2009

The restructuring of Nortel seemed so easy: Spend a few months trying to figure out if a New Nortel could happen before ultimately deciding to toss in all of its strategic chips by deciding to sell everything.

But just when the destruction of Nortel was nearly a fait accompli, MatlinPatterson could throw a wrench in the works by putting together a deal to acquire Nortel.

So what you’ve got are two diametrically opposite approaches: Nortel’s management and board wants to sell everything at the highest possible price, while Matlin Patterson apparently wants to keep Nortel intact.

From the outside looking in, Matlin Patterson looks like a white knight, especially compared to the dark knights now running Nortel. But keep in mind, Matlin Patterson’s bread and butter is acquiring distressed companies, and then maximizing value for its investors.

So don’t expect, Matlin Patterson to take over Nortel, and then play the nice guy. It’s in the business of making – a lot of money – and Nortel could have huge ROI potential.

Without any knowledge about Matlin Patterson’s plans for Nortel, you have to believe it sees a lot of value in Nortel. Rather than Nortel selling everything, Matlin Patterson may believe a better approach is keeping Nortel together, and then de-leveraging itself by selling non-core assets.

This seems like a better and more pragmatic approach than the senseless destruction of a once-great company that is suffering from bad strategic decisions and a lack of long-term vision.

More: If you take a look at Matlin Patterson’s Web site, there’s little information about the company and its investment approach. It was founded by investors David Matlin and Mark Patterson, former distressed debt specialists at Credit Suisse Group.


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  • silentwatcher

    Well then do you believe that MP will keep the employees for long? Which is the lesser of the 2 evils for the existing employees? A very large established wireless networking company or a “vulture” capitalist.

  • NTInfidel

    Yep. This would implode as more customers and employees flee. That is why I think this is simply posturing to drive up the price.

  • NTInfidel

    Quote from your link:
    “It's very much a Humpty Dumpty story and we're beyond the point at which anyone can hope to keep all of the various pieces together under Nortel's banner,”

    The scale of trying to patch Nortel back together again is beyond anything anyone has ever done. Nortel has offices everywhere with angry workforces in every jurisdiction(look at France today). Something MP would plan to continue by not fixing the biggest liability: The pension. Any insider can tell how fragile the employee situation already is.

    MP does not have the experience to reassure the customers either.

    Other credit holders: Why would they take a debt for equity swap when this will almost certainly fail again and equity gets wiped out again, they go from maybe 50 cents on the dollar now to maybe 1/10th that?

  • borissss

    But NSN already has cheap engineers to carry out the NA work.But MP don't.Since wireless is the core asset,they would prefer adjustments and reforms rather than a major change in the short and medium term.Also they would prefer selling of Enterprise and/or MEN to compensate the extra cost of restructing carrier voice operations.

  • silentwatcher

    NSN doesn't have engineers with Nortel CDMA know-how to do the work. They have never been in the CDMA business and if you do say that they could outsource the cdma work to contracting companies, what would stop MP from doing the same?

  • less

    I smell libel in the post above mine, is all.

  • thought4you

    If the Employees want to dictate their future then why don’t they investigate the possibility of purchasing a share of the company and join forces with MatlinPatterson or Robert Farchat.
    Just like West Jet where every employee is an owner. If every employee all 30,000 of them put up $10,000 dollars each they would have $300 million that would be approx ¼ of Nortel’s entire worth. This will give Employees a REAL say in the Future Management of this Company.

  • cooluswiz

    I totally agree as we have made this company and can do with better inside and get rid of fat managers. The question is how we go about it ….We need a seperate forum to discuss and act…..

  • thought4you

    To move fast I would suggest an Email campaign to see if all are on board.

  • NTInfidel

    And what should we do if we don't want Vulture MP or old man Farchat (74) to take over? I don't think anyone in scope on the NSN sale would want this.

    The best possible outcome is to be bought out into a healthy company like NSN. Not prologing the Nortel death march with a new set of clueless managers trying to patch humpty together again.

  • tryn2makealivin

    Yeah so lets run this theory out, I feel like I have been on death row for 5+ years at Nortel. I have been paying down bills and hiding what little cash I can knowing or suspecting Nortel is COOKED. Let me take the cash I have or borrow more to try and save this corrupt company.

    Yeah, I get it that makes perfect sense. Where do I send the check(please don't cash until two fridays from the last) :)

  • scalppeeler

    No S**T eh..morons?
    Least you been paying down your bills.

  • Theleftbehind

    Well….

  • Theleftbehind

    Well….

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