Nortel Networks, the telecommunications equipment maker that was Canada’s biggest company by market value at the height of the 2000 technology boom, filed for bankruptcy protection in the US, Canada and Europe on Wednesday.
The company, based in Toronto, said the bankruptcy process would allow it “to deal decisively with its cost and debt burden, to effectively restructure its operations and to narrow its strategic focus in an effective and timely manner”. It added that its operations would continue “without interruption”
Although it has cash reserves of $2.4bn, Nortel said that it was filing for bankruptcy “to preserve its liquidity and fund operations during the restructuring process”. An interest payment of about $107m was due on Thursday.
Lenders have been reluctant since the onset of the credit crunch to provide financing, known as debtor-in-possession financing, to companies in bankruptcy protection.
“Nortel must be put on a sound financial footing once and for all,” Mike Zafirovski, chief executive, said. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”
Nortel has been battered in recent years not only by growing competition and weakening demand for its products, but by a series of accounting and corporate governance scandals. One former chief executive is facing fraud charges.
Nortel’s origins stretch back to the Bell Telephone Company of Canada which, together with its US counterpart, received the patent rights for the telephone from Alexander Graham Bell in the late 19th century.
It has subsequently been a pioneer in modern telecommunications technology, providing such products as switches, routers and fibre-optic cable to many of the world’s leading telecoms companies.
Nortel shares, once among Canada’s bluest of blue chips, reached a peak of C$123 in March 2000. They closed at 38.5 cents in Toronto on Tuesday, taking account of an earlier ten-for-one share consolidation. Its workforce has shrunk from 95,000 to about 26,000.
TORONTO (Reuters) - Nortel Networks Corp, North America's biggest maker of telephone equipment, filed for bankruptcy protection on Wednesday, as the global economic downturn further erodes its once high-flying business.
The filing came a day before the Toronto-based company was due to make an interest payment of about $107 million.
Nortel and a number of its affiliates filed for Chapter 11 bankruptcy protection in the United States, according to a court filing.
Its shares plunged more than 76 percent to 7.5 cents in electronic pre-market trading.
"Based on this filing, the board of directors must believe that not only is the fourth quarter bad, but that the first quarter is going to be just as bad or worse," said Duncan Stewart, an analyst at DSAM Consulting in Toronto.
"Although they have cash in the short term, even the medium-term outlook is not enough to make the company viable as a going concern."
According to the court filing in U.S. bankruptcy court for the district of Delaware, Nortel's major creditors include Bank of New York Mellon, with claims valued at nearly $4 billion.
Nortel's shares have tumbled along with the company's fortunes, sinking into penny-stock territory in recent months. In mid-2000, at the zenith of the company's success, they were worth more than C$1,100 each, adjusted for a stock consolidation that took place in late 2006.
"It's obviously a remarkable transformation from where it was as the largest company in Canada worth about 35 percent of the TSX in 2000," said Gavin Graham, director of investments at BMO Asset Management.
"But this is a reflection of the way that the telecommunications industry has changed."
Nortel has faced intense competition from North American and European rivals such as Alcatel-Lucent, as well as low-cost Asian vendors such as Huawei Technologies.
The company has also suffered as telecom companies scale back spending on the equipment that Nortel makes.
The global economic slowdown has exacerbated Nortel's problems, leading it to warn last month that because of current conditions, its business was coming under increased pressure and its cash position and liquidity were deteriorating.
In November, it reported a $3.4 billion third-quarter loss, cut its 2008 outlook and announced 1,300 layoffs, or about 5 percent of its workforce. It also said it would freeze salary increases, cut back on consultants and review its real estate portfolio.
(Additional reporting by Scott Anderson; Editing by Frank McGurty)
($1=$1.22 Canadian)
据国外媒体报道，根据一份法庭文件显示，北美最大电信设备制造商北电网络（Nortel）于周三向美国法庭提交了破产保护申请。
多伦多DSAM咨询公司的分析师邓肯·斯图亚特（Duncan Stewart）认为，北电申请破产保护说明，公司董事会已经认定，不仅第四季度的业绩会很糟糕，而且今年第一季度也将一样糟糕甚至更糟；虽然短期内北电还有资金运营，但即使是中期前景也不足以让公司持续经营下去。
近几个月，随着公司的资产缩水，北电的股价也跌入了“分”级行列。RBC资本市场的分析师马克·苏（Mark Sue）此前曾表示，破产对于北电来说是“肯定的”，因为在2011年前债务负担将拖垮公司。
北电面临来自北美和欧洲竞争者如阿尔卡特-朗讯及华为技术等亚洲公司的激烈竞争，同时电信公司削减设备支出也打击了公司的业务。因全球性经济危机，北电业务面临巨大压力，现金及流动性状况正在恶化。
去年11月北电报告季度亏损34亿美元，并宣布裁员1300人和下调2008年全年预期。同时公司还宣布冻结工资上涨、削减咨询费用和重新评估房地产投资组合。 |
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