Nortel Looking To Unload Enterprise Solutions Unit

Chapter 11 bankruptcy protection

Word that Nortel is looking for potential buyers for all of its divisions comes as the Toronto-based company enters into a "stalking horse" asset sale agreement with Nokia Siemens Networks for the purchase of the majority of its wireless CDMA business and LTE Access assets, to the tune of $650 million. The purchase, Nortel said, "provides a clear path forward for our valued LTE and CDMA wireless customers."

According to Nortel, its wireless business is the second largest supplier of CDMA infrastructure globally, doing business with three of the top five worldwide CDMA operators, including Verizon Wireless.

A Nortel spokesperson said in a statement that "we believe that the best outcome for each of these businesses is to find buyers who can carry Nortel's rich innovation platforms into the future, but we will assess other restructuring alternatives for these businesses in the event we're unable to maximize value through a sale."

Finally, Nortel added that it will delist its common shares and the NNL preferred shares from trading on the Toronto Stock Exchange.

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Nortel has faced major hurdles over the past decade, filing for Chapter 11 bankruptcy protection in January. At the time, the company said it would submit plans for restructuring in May. Nortel has repeatedly asked for extensions amid quarterly revenue declines.

Nortel announced the asset purchase agreement between Nortel and Nokia Siemens late Friday night. Essentially, Nokia Siemens is the stalking horse for the CDMA and LTE units, meaning the company has set the floor price for the auction. Nortel said the agreement is subject to bids of other suitors, but that Nokia Siemens has the right to increase its buying price in the event of competing offers.

The sale includes substantially all of Nortel's CDMA and LTE assets, including intellectual property, research and development, existing inventory and the assumption of all customer and partner relationships. It is expected to be finalized late in the third quarter.

The agreement with Nokia Siemens also specifies that at least 2,500 Nortel employees will have the opportunity to continue with Nokia Siemens.

"Maximizing the value of our businesses in the face of a consolidating global market has been our most critical priority," Nortel President and CEO Mike Zafirovski said in a statement. "We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible. This will ensure Nortel's strong assets -- technologies, customer relationships, and employees -- continue to play an important role in driving the future of communications. The value of Nortel's wireless business is recognized throughout the industry. The agreement we are announcing today is solid proof of that value and represents the best path forward for our other businesses."