Nortel’s Bonds Are Hot, Red Hot

I don't get it. Company goes under with a reported 12 Billion in liabilities, including debts of 6.3 billion.
With at least a couple of years worth of E&Y and rafts of Lawyers & consultants, all charging massive fees, plus paying a still badly defined and run “NBS”, all to draw down on what cash is left.
And a relative pittance received in total asset sales compared to all that, let alone what it was valued at on the books.

Surely these bond players must be complete idiots? )
It should all go to pensioners, not gamblers like this.

“And a relative pittance received in total asset sales compared to all that, let alone what it was valued at on the books.”

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Value on books? They misled assets to get the money!

They neglected to list their largest pension deficit in Canada (since Alcan's pension deficit is offshore) in these whopping 10.25% interest bonds to the open markets, than a mere foot note, a loophole closed immediately thereafter.

Their largest asset on books they sought to clean for so long was also a tax credit and the CEO/CFO are being sued for this misleading.

Yet the big business signed them up as preferred creditors against assets!
What assets with their largest pension deficit in Canada missing from the application and their largest asset in the form of a tax write off in books they sought to clean so long, even the lenient SEC finally stepped in to monitor years later!

I question how their big business pals and bondholders gambled on the misleading assets, securing on paper that they would get paid first, when assets were misleading (tax credit) or liabilities missing in the application to qualify (the largest pension shortfall in Canada), short of a mere footnote, and a gain, a loophole closed immediately thereafter. Bonuses for financial innovation, $2B in bonds and them they went on to print another $2B in dilutive Notes!

$3B in asset sales so far won't buy new shoes relative to what they owe and ongoing costs, stalled costs, interest, creditors, fees, etc… endless, the bondholders may have surprises yet I think

That's very close to telling it like it is/was.

And to add insult to injury , the Canadian government BACK THE SALE with a $300 mill loan to insure that the Wireless division went through. How's that for a Government who is Patriotic and for the People of Canada, this would have NEVER happened in any other country. It very simple , they used the “excuse of a Global economic melt down” to pull off this heist. Look at the facts.. MatlinPatterson was looking for a debt for equity swap for there bonds , Nortel said NO! Mike Zafirovski wanted the Common Shares delisted BADLY! , he tried TWICE and was successful on the second attempt , this was to prevent someone from acquiring over 51% of the Common Stock… taking controlling interest and save the company (and not too expensive at 5 cents per share) 2.4 billion in cash cushion … which baffle experts on why Nortel even filed, A government that helped fund the break-up…WTF? And now as the bankers of the world turn back up the world economy by resuming the printing of money … companies like Nortel “could have just resumed business as usual …. But they are GONE !

Perfect timing … it was a little bumpy but they pulled it off !!

As I understand it, the bondholders are in the same position as the retirees, etc., that is, unsecured creditors. If the bondholders get 76% of what they're owed, the retirees will lose a lot less than everybody expected, too.

In regard to “Why did Nortel file for bankruptcy?”, my suspicion is that if Nortel made it through this recession without bankruptcy, over the next few years it would have acquired enough more debt that the bankruptcy would have been much worse.

No , Bond holders are AFTER Secured creditors but before unsecured creditors , Preferred Shareholders and other UNSECURED debtors that are owed money are before common Shareholders and Employee's. Employee's and common Shareholders are not creditors in the way that they lent the company money to expand or operate its business. Banks , Bonds , Preferred Shareholders, Suppliers , Contractors are all debtors. Some confusion over Preferred Shareholders with E/YOUNG is that they are Equity holders and “SHOULD” receive nothing , this is false. Nortel had issued 3.7 billion in Bonds and 750 million in Preferred's , Preferred's have NO voting rights , no capital appreciation , a dividend or interest payment … just like Bond holders , except that they do not have a maturity date unless the company decides to buy them back … more accurately its a line of credit Nortel took out. It is also very ballsy of Mike Zafirovski to tell Preferred “debt ” holders that they will likely receive no value for there holdings , this is somewhat of a new development in Corporate America …lol The only connection to EQUITY that Preferred's have is that they are paid out of Equity if the Company liquidates , whether Voluntarily or Involuntarily … just like everyone else.

Im holding almost 100K shares in both series 5 & 7, in your opinion do you think the preferred holders will recieve any value for their shares? Thanks Keith

thanks I did

It would be a criminal act if they didn't. Provided you filed a claim before Sept 30/09

The only connection to EQUITY that Preferred's have is that they are paid out of Equity if the Company liquidates , whether Voluntarily or Involuntarily . like everyone else.

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