A Look at Nortel’s Asset Sales

By Mark Evans | Published: October 15, 2009

I received an interesting spreadsheet from one of my Nortel sources looking at the assets that Nortel has sold, the assets still on the block, as well as the company’s total assets and liabilities. Some interesting food for thought.

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  • bankrupt_bob

    Yeah, but more like fodder than food ;>)

  • ntpurgatory

    So looks about 50 cents on the dollar. Better than I thought, but, this game is not over yet. Every passing day a division does not sell, the value goes down…

  • jessica987

    it's not usually a good sign when companies start selling off all their assets

  • Darth_Zman

    $300M for CVAS!

    That looks a bit light to me. From rumour mill 4 interested parties, massive install base… would be surprised if this asset sold for less than $1B.

  • scalppeeler

    Fifty cents on the dollar.
    Put down the crank pipe.
    Take away the legal fees.
    Take away the fact that the big creditors will get first crack and bleed it.
    Take away claims like the IRS we don't even know about it.
    I heard there were something like 50,000 claims.
    Probably more by now.
    At the end of the day the ex employee will get less than a dime on the dollar and they won't see that for years.
    Keep wearing those rose coloured glasses.

  • joremero

    IRS will get much much less, so the asset/liability ratio looks much better…

    and don't forget tomorrow's auction….it shouldn't be that much, but for sure more than Z's claim…..

    Are the already-laid off employees' claims already considered there?

  • protosphere

    what about interest on debt too? Legal fees…

    IRS may not get 3B and Z zip but there are so many growing creditors, suppliers etc,

    I would be surprised to see a 5 to 14B ratio when all is said and done =) I was off by $200M less last month doing the same math… =)

  • ntlifer

    Can anyone put a value on the 47 CLASS A network that Nortel owns. This has to be worth millions. This has been asked before by others on this board. Does E&Y or the idiots left at the top even understand they have this asset?

  • Lookahead

    More to that: Nortel owns MSS platforms which are taken from MEN but not including in the MEN auction and also have wide customer bases.

  • vladhed

    That discussion was bandied about internally and I believe it's not really worth $$ – chunks will likely go with the business units, the rest back to IANA. With IPv6 coming IPv4 space will quickly become worthless

  • random123

    Given that the UK pension fund has 90% from the UK Government, i.e. insurance given by the UK Pension Protection Fund, I wonder if that will stop them being awarded any compensation when payouts are decided.

  • RedFlag

    Why are Nortel bonds trading at 62 cents on the dollar if the payout will be less than 50%?????

  • less

    Call me if you manage to bend a pin on the PP 15k backplane, there

  • protosphere

    http://www.canada.com/business/fp/Zafirovski+se…

    The price of the bonds has risen steadily, to 60¢ on the dollar, after plunging as low as 10¢ in March.

    But with hundreds of new claims, including 50 claims of more than $1-million, several above $100-million and a few in the billion-dollar range, that optimism could come under pressure.

  • LM

    because the available cash is calculated to be $7.8B while the liabilities are $11.8B, the IRS $3B is settled for I think $9M, so 7.8/11.8= 66%

  • protosphere

    http://www.canada.com/business/fp/Zafirovski+se…

    Clarence Chandran, the acquisition chief under John Roth, who is seeking $3.6-million, and Gary Donahee, a former top sales executive, who wants $2.8-million.

    Several executives who left Nortel during the Mr. Zafirovski years have filed, including Sue Spradley, Steve Schilling, Steve Slattery, Mike Pangia and Dennis Carey.

    Also putting in claims are several people still on the payroll, including management team members Peter MacKinnon and Joel Hackney. Numerous other executives filed claims earlier for millions of dollars.

    other big-name claimants span almost a decade of Nortel history, starting with Clarence Chandran, the acquisition chief under John Roth, who is seeking $3.6-million, and Gary Donahee, a former top sales executive, who wants $2.8-million.

    Several executives who left Nortel during the Mr. Zafirovski years have filed, including Sue Spradley, Steve Schilling, Steve Slattery, Mike Pangia and Dennis Carey.

    Also putting in claims are several people still on the payroll, including management team members Peter MacKinnon and Joel Hackney. Numerous other executives filed claims earlier for millions of dollars.

    It is still too early to calculate how big the final bill will be because many claims do not have dollar figures attached.

    For example, Mr. Zafirovski and former directors Harry Pearce, John Cleghorn, Bill Owens and Manfred Bischoff are seeking protection from a $100-million suit filed by U.S. employees over losses in their retirement accounts.

    Lawyers driving a U.S. suit seeking $300-million from a former Nortel spinoff have also filed claims.

    Big Nortel subsidiaries in Turkey, China and Korea filed more than $60-million in claims, but a score of other operations around the world made open-ended claims.

    There is also a separate claim group in Canada, but those claims aren’t readily accessible.

    However, several Ottawa companies including Bridgewater, Eion and Kanatek have made new claims in the U.S.

  • pickaxe2

    Call me daft but I thought that no one unsecured creditor could be put before another?!!!! Therefore why is Mike Z's shown as a separate item & NOT as a part of the rest of the unsecured creditors?!

  • LM

    looks like it was shown just for effect, same a s the Lowe claim.

  • zeroman

    it will eventually be around 20-30¢

  • zeroman

    … of whom half are moving to other products because its too old, obsolete.

  • D.wayneSLowRowe.LOL

    The enterprise CS2100 VOIP solution, is based on Carrier Software Division's AS2000/CS2000 VOIP solution. Now that Avaya has bought out the Enterprise portion of Nortel. Who will be supporting the next release of CS2100 software?? Will Avaya buy support from whom ever purchases the Nortel Carrier Software Division, to continue the evolution of the enterprised based CS2100 (AKA SL100) or will Avaya spin off these customers (mostly military and few commercial i.e. universities, hospitals and financial institutions).

  • geoffot

    I think it is great to have a spreadsheet like this out for the public. It would be a good exercise to collaborate on refining it. I don't quite understand the two dollar columns, i.e. specifically what they represent. Also, there seems to be some things missing from the liabilities category. What specifically comes to mind is (a) attorney costs and (b) future termination costs of remaining employees. This assumes (of course) that continuing operations of the corporation would be cash neutral.

  • freqmgr

    Future termination costs of remaining employees? Meaning they get severance? Or is that number the cost of their salary/benefit package?

  • freqmgr

    Gary Donahee…? The same turkey whose mouth killed a major wireless deal with TelMex? He should be paying in, not asking for money.

  • subvii

    No, the pension fund will be treated like any other creditor.

    Also, people are getting far from 90% of their pensions when you consider inflation etc.

  • GoProto

    Because he was A Recognized Leader..

  • geoffot

    It's more general than that. The accounting presumption is that when an employees are “active” they are productive to the benefit of the company and just part of the cash flow. When they are terminated, all of the associated costs of the termination including all monies due (whatever advance notice (varies by country), vacation payout, etc. go into a different bucket. That bucket (for which there is often a dollar amount quoted when layoffs are announced to the financial press) are non trivial.

  • Pauljam

    The UK pension isn't getting anything from the UK government, the PPF is funded by levies on other companies. Also, it is not covering 90% of the Nortel fund, the maximum any new pensioner can get is 90% of a capped amount which has little bearing on the entitlement owed by the scheme and is a lot less for many long service (ex) employees.

  • Pauljam

    The UK pension isn't getting anything from the UK government, the PPF is funded by levies on other companies. Also, it is not covering 90% of the Nortel fund, the maximum any new pensioner can get is 90% of a capped amount which has little bearing on the entitlement owed by the scheme and is a lot less for many long service (ex) employees.

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