Private equity money ups stakes in Nortel auction


Private equity money ups stakes in Nortel auction

Alex Scroxton

Private equity outfit MatlinPatterson has upped the stakes in the impending auction of Nortel’s wireless division, topping Nokia Siemens Networks’ stalking horse offer by $75m.

The firm, which owns about 10% of Nortel’s total debt, says its $725m offer will provide a “superior outcome” for Nortel and its stakeholders.

Nokia Siemens was expected to be gifted Nortel’s CDMA and LTE Access assets for the bargain basement price of $650m in a court-mandated auction to be held on Friday – and had gone so far as to obtain Canadian government funding to help it – but that outcome is now by no means assured.

MatlinPatterson has engaged several ex-Nortel executives, including former North America president Dion Joannou, to assist in developing alternatives, and believes it has now come up with a viable solution.

In an open letter to Nortel stakeholders, the group said it was “confident that the CDMA and LTE Access assets can emerge from bankruptcy as a reinvigorated, independent company.”

“We are unwilling to accept and will actively take steps to prevent a ‘fire sale’ of Nortel’s core assets followed by the wholesale liquidation of the remaining businesses.”

If the chips fall in its favour, MatlinPatterson vowed to pursue opportunities to pick up further Nortel assets as they become available during the chapter 11 cases.

“We believe that Nortel’s assets, under the right stewardship, can form the core of a reorganised Nortel with a bright future as a well capitalised, stand-alone entity,” the letter said.

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