Nortel: We’ve Made $2B Off Auctions, Kept 13,000 Jobs
Bankrupt Nortel Networks has generated more than $2 billion net by auctioning off its various divisions, and expects to add another $1 billion to that number once the Metro Ethernet Networks, GSM/GSM-R and carrier VoIP transactions close.
Nortel also said in an update on Thursday that 13,000 Nortel employees have gone on to find jobs with the companies that have purchased its assets. Thousands more workers, though, have lost their Nortel jobs altogether – and without severance pay.
Meantime, Nortel said there’s more to do before it winds up. The company just reached a key deal with pensioners and now it’s trying to get court approval for an incentive plan to keep workers in the corporate and business services groups. The corporate side still must tackle projects including completing pending unit sales and making the most of Nortel’s intellectual property. This could be a hint that Nortel may end up as a patent-holding firm.
The business side, on the other hand, is maintaining customer and network services while the auctioned-off divisions transition to their new owners. Workers in that unit further are continuing R&D and human resources work, as well as other necessary tasks that will stretch out over the next year or two, Nortel said.
“The scope and complexity of the work to date and that remains to be completed requires the efforts of our specialized employees around the world,” said Nortel Chairman David Richardson. “In order to meet our restructuring objectives, bring the process to conclusion and to fulfill our obligations to provide transitional services to purchasers of our businesses, it is essential that we retain the personnel with the required skills, experience and institutional knowledge.”
To that end, Nortel wants bankruptcy courts in the United States and Canada to approve “an employee plan … designed to retain personnel at all levels,” the company said in a press release. The plan was developed with so-called independent expert advisers “taking into account the availability of more stable and competitive employment opportunities available to these employees elsewhere.” Reading between the lines, could that mean more hefty bonuses for executives and managers? If so, the justification may be that 88 percent of the costs would be funded by the companies that have bought Nortel’s businesses.
“The employees being offered participation in the plan were instrumental in the work completed to date and are critical to fulfilling the remaining tasks,” Richardson explained. “The loss of these key employees at this time would create significant delays in our activities and place the achievement of our objectives at risk. In short, we believe the plan is in the best interests of our creditors and other stakeholders, and of the process itself.”
While Nortel awaits the courts’ ruling, it said it has taken care of some outstanding matters. For example, it has resolved transfer-pricing disputes with Canadian and United States tax authorities and restructured some of its Asia Pacific affiliates’ “intercompany indebtedness” so they can keep operating.
