TORONTO, ONTARIO--(Marketwire - 03/19/10) - Nortel(1) Networks Corporation (OTC.BB:NRTLQ - News) announced today that it, its principal operating subsidiary Nortel Networks Limited (NNL), and certain of its other subsidiaries including Nortel Networks Inc. and Nortel Networks UK Limited have completed the sale of substantially all of the assets of Nortel's Optical Networking and Carrier Ethernet businesses to Ciena Corporation (Ciena). Ciena has elected, as permitted by the terms of the sale agreement, to replace the US$239 million principal amount of convertible notes with cash consideration of US$244 million, and thus pay an all cash purchase price of approximately US$774 million, subject to a working capital adjustment currently estimated as a downward adjustment of approximately US$62 million. Under the terms of the sale, Nortel will provide certain transitional services to Ciena.
"This successful divestiture of another large-scale business illustrates the significant progress on Nortel's plan to preserve both our technology innovation and rich base of skilled employees, while obtaining significant value through the sale of our businesses," said Pavi Binning, Chief Restructuring Officer, Nortel. "The sale of our Optical and Carrier Ethernet businesses to Ciena enables customers to continue to benefit from Nortel's rich heritage of innovation in optical networking. It also provides a path forward for 2,000 skilled employees who will now take their expertise to Ciena."
As previously announced, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.
Management Changes
With the sale of the Company's main businesses and the focus of Nortel Business Services (NBS) and Nortel's Corporate Group on the remaining work previously announced on February 11th, Pavi Binning, Chief Restructuring Officer, Chief Financial Officer and Executive Vice President, and the Board of Directors, have jointly determined that it is an appropriate point for Mr Binning to step down from his position and to depart from the Company. Effective March 21, 2010, Pavi will step down from his role as CRO, CFO and EVP and for a short period thereafter, Mr Binning will stay on with the Company to assist in the completion of the announced business sales and in the transition of certain of his responsibilities. Effective March 22, 2010, John Doolittle will assume the role of Chief Financial Officer of the Company and Nortel Networks Limited in addition to his current responsibilities leading the Corporate Group. In light of the milestones met to date and the focus of the remaining work, the position of CRO will not be filled.
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