Research in Motion is calling on the federal government to review the auction of Nortel Network’s assets claiming it was shut out of bidding for the troubled network hardware maker’s wireless properties.
Jim Balsillie, co-CEO of the BlackBerry maker, said his company was prepared to put down as much as US$1.1 billion for Nortel’s code division multiple access (CDMA) and Long Term Evolution (LTE) businesses but restrictive conditions levelled on RIM’s bid is preventing the company from keeping the keeping Nortel’s assets in Canadian hands.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, a RIM statement issued late Monday night said.
Despite its efforts, “RIM has found itself blocked at every turn,” Balsillie said.
The statement said, RIM sought to be considered as a qualified bidder in the auction for Nortel’s wireless business but was told it would only qualify if it pledged not to submit offers for other Nortel assets for a year.
“In seeking to impose this condition, Nortel and its advisers were fully aware if RIM’s desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel’s business under Canadian ownership” the statement said.
“Despite repeated efforts, Nortel, its advisers and its court-appointed monitor have rejected RIM’s repeated attempts in meaningful discussions.”
The statement also pointed out that the Nokia Siemens bid is propped up by a multi-million dollar loan from the government.
“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,” the statement quoted Balisillie as saying.
The loss of Canadian ownership of Nortel’s CDMA and Long Term Evolution Access businesses “may significantly, adversely affect national interests, with potential national security implications, and that the Government of Canada should review the situation closely,” the statement said.
On Monday, Nortel announced that it has entered a “stalking horse” agreement in which Avaya Inc. of Basking Ridge, N.J. will buy its enterprise units for US475 million.
The move comes about a month after Nokia Siemens Networks entered into a similar agreement to buy Nortel’s carrier wireless assets for US$650 million.
A group led by former Nortel president Robert Ferchat is hoping to raise $1 billion to keep the company in Canadian hands and is asking the government to delay the sale of its assets.
New York-based private equity firm MatlinPatterson Global Advisors is also backing a group led for former Nortel presidet Dion Joannou’s bid for Nortel.
In January, this year Nortel applied for court approval for creditor protection in the Canada, the U.S. and Europe, following years of financial troubles.