BlackBerry-maker Research In Motion (RIM) claims that Nortel Networks is preventing it from bidding on Nortel's CDMA and LTE Access wireless assets as Nortel auctions off its business units to emerge from Chapter 11 bankruptcy protection.
According to a statement RIM published on its Web site, RIM "has effectively been prevented from submitting an offer for the Nortel Networks wireless business that is the subject of a bankruptcy auction scheduled to occur on July 24, 2009."
RIM said it was interested in making an offer on Nortel's CDMA and LTE Access businesses, which also include current and next generation technology for wireless infrastructure and mobile devices. Currently, Nokia Siemens Networks leads the "stalking horse" auction for Nortel's carrier wireless division with a bid of $650 million, a deal that was approved by the Federal Trade Commission this month.
While Nokia Siemens is the front runner for Nortel's carrier wireless assets, Avaya is the leading bidder for Nortel's enterprise solutions business, which comprises Nortel's voice, data and government solutions divisions. On Monday, Avaya entered a $475 million bid for Nortel's enterprise-focused businesses.
Bids for Nortel businesses are due by 4 p.m. Tuesday.
"RIM sought to be qualified as a qualified bidder in Nortel's auction bidding process for the wireless business, but RIM was told it could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year," RIM said in its statement. "In seeking to impose this condition, Nortel and its advisers were fully aware of RIM's desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel's business under Canadian ownership. Despite repeated efforts, Nortel, its advisers and its court-appointed monitor have rejected RIM's repeated attempts to engage in meaningful discussions."
RIM added that based on a preliminary review, the Waterloo, Ontario-based company was willing to pay about $1.1 billion for Nortel's CDMA and LTE Access businesses and "certain other assets." RIM did not specify what those other assets were.
"RIM believes that such an offer would result in an extremely attractive price for Nortel creditors and value substantially in excess of the stalking horse bid made by Nokia Siemens Networks," RIM said.
RIM contends that the loss of Canadian ownership of Nortel's CDMA and LTE Access businesses will significantly and adversely affect national interests with potential national security implications and that the Canadian government should review the situation.
"RIM is extremely disappointed that Nortel's world-leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada's own Export Development Corporation is preparing to help by lending $300 million to another bidder," RIM co-CEO Jim Balsillie said in a statement. "RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM's leadership in the research, development and distribution of leading-edge wireless solutions, but RIM has found itself blocked at every turn."
Toronto-based Nortel, however, said it was disappointed that RIM is airing out its dirty laundry publicly, adding that RIM did not object to the June 30 approval of the court-established bidding procedures for Nortel's assets.
"Since the approval of the procedures, Nortel has engaged with a number of potential bidders, including RIM," Nortel said in a statement. "Other parties moved expeditiously to comply with the court-approved procedures to become a qualified bidder. It was not until July 15, 2009, that RIM submitted a letter to Nortel asking to be a qualified bidder and since that time, Nortel has diligently attempted to work with RIM on acceptable confidentiality terms relating to Nortel's valuable intellectual property assets, but RIM refused to comply with the court-approved procedures."
Nortel, however, said that RIM is still able to bid if it complies with the stalking horse auction procedures.
"Notwithstanding RIM's statement today, Nortel continues to be willing to provide RIM with the opportunity to participate in the auction and even without RIM's participation believes that an active auction will result in maximizing the value of Nortel's assets," Nortel said.
