SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMC NEWS

TMCNET eNEWSLETTER SIGNUP

UPDATE 2-Nortel shares plunge ahead of interest payment
[January 13, 2009]

UPDATE 2-Nortel shares plunge ahead of interest payment

TORONTO, Jan 14, 2009 (Reuters via COMTEX) --
Shares of Nortel Networks Corp fell more than
20 percent on Tuesday, two days before the struggling Canadian telecom equipment
maker is due to make an interest payment of about $107 million.
North America's biggest maker of telephone gear had about $2.3 billion in
cash and cash equivalents at end of September, suggesting it would have no
difficulty in making the payment.
Even so, Duncan Stewart, an analyst at DSAM Consulting in Toronto, said:
"The issue is not whether or not they can pay it. ... It's the idea of: if you
know you're eventually going to default anyway, why not do it now and keep the
... interest payments you would have shelled out?"
A Nortel spokesman declined to comment on whether the company would make
the payment. "It is our policy to not comment on our creditor obligations other
than what we disclose in our public filings," he said.
CBC News reported that Nortel's board of directors would meet on Tuesday
evening to decide whether or not to make the interest payment.
Nortel's shares closed down 24.5 percent at 38.5 Canadian cents on the
Toronto Stock Exchange. In mid-2000, they were worth more than C$1,100 each,
adjusted for a stock consolidation that took place in late 2006.
RBC Capital Markets analyst Mark Sue said bankruptcy was a "distinct
possibility" for Toronto-based Nortel and that it could collapse under its debt
load before 2011.
Last month, a media report said Nortel had sought legal advice on a
bankruptcy-protection scenario in case its current restructuring plan failed.
Nortel's 10.75 percent notes due in 2016 fell to 24.5 cents on the dollar
on Tuesday, yielding almost 50 percent, according to MarketAxess data.
Nortel has faced intense competition from North American and European
rivals such as Alcatel-Lucent, as well as low-cost Asian vendors such as Huawei
Technologies.

The company has also suffered as telecom companies scale back spending on
the equipment that Nortel makes.
The global economic slowdown has exacerbated Nortel's problems, leading
it to warn last month that because of current conditions, its business is under
pressure and its cash and liquidity are deteriorating.
In November, it reported a $3.4 billion quarterly loss, cut its 2008
outlook and announced 1,300 layoffs, or about 5 percent of its staff.
It also said it would freeze salary increases, cut back on consultants
and review its real estate portfolio.
(Additional reporting by Walden Siew in New York; Editing by Frank McGurty
and Ted Kerr)
($1=$1.23 Canadian) Keywords: NORTEL/

(wojtek.dabrowski@reuters.com; +1-416-941-8009; Reuters Messaging:
wojtek.dabrowski.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including
by framing or similar means, is expressly prohibited without the prior written
consent of Thomson Reuters.
MMMM

[ Back To TMCnet.com's Homepage ]






LATEST VIDEOS

DOWNLOAD CENTER

UPCOMING WEBINARS

MOST POPULAR STORIES





Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy