Bondholders blamed for Nortel talks collapse

The collapse of mediation efforts to divide Nortel Networks Corp.’s remaining assets was caused by bondholders demanding full value plus interest on their investments in the now bankrupt former telecom giant, according to the Canadian Auto Workers union.

“As with previous mediations, failure resulted because Nortel bondholders who bought their bonds for 20 cents on the dollar wanted not only full value of their bonds amounting to $4.5 billion, but years of interest on top of that,” said Ken Lawenza, CAW national president in a statement issued Friday. During the company’s heydays in the mid-1980s, CAW represented no less than 5,000 Nortel workers in five locations.
 

RELATED CONTENT

How Nortel execs were found not guilty for fraud
Nortel Interactive Timeline

On Thursday, Nortel’s creditors, the company’s representatives and former employees including retirees and laid off workers sat down to decide how the remaining $9 billion in assets of Nortel should be divided among them.
Prices on $1.675 billion of Nortel bonds plummeted as much as four per cent after the announcement by mediator Warren K. Winkler, the chief justice of Ontario, that negotiations collapsed.
Previous talks among the groups have collapsed. Among the chief difficulties is that the remaining assets is not enough to cover the more than $36 billion in claims.

The network equipment provider was worth nearly $300 billion and had more than 90,000 employees worldwide, when it was at the height of its profitability. Up to 2000, Nortel was considered one of Canada’s most successful companies and it shares traded at a peak of $124.50,

CAW also took a stab at Canada’s bankruptcy laws, saying they left many Nortel pensioners at a disadvantage.

“It is inconceivable that junk-bond speculators can reap unconscionable profits from utter misery,” said Jerry Dias, Lawenza’s assistant. “Sadly, our federal government, who could reform the existing laws and regulations, is allowing this to happen because it is ,more interested in protecting financial opportunists that the Canadian workers who built Nortel…”

 

 

 

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Empowering the hybrid workforce: how technology can build a better employee experience

Across the country, employees from organizations of all sizes expect flexibility...

What’s behind the best customer experience: How to make it real for your business

The best customer experience – the kind that builds businesses and...

Overcoming the obstacles to optimized operations

Network-driven optimization is a top priority for many Canadian business leaders...

Thriving amid Canada’s tech talent shortage

With today’s tight labour market, rising customer demands, fast-evolving cyber threats...

Staying protected and compliant in an evolving IT landscape

Canadian businesses have changed remarkably and quickly over the last few...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now