Business
U.S. Bankruptcy Judge Kevin Gross who is overseeing the liquidation of Nortels U.S. assets, ruled yesterday that Nokias $810 million offer should be rejected. Ciena argued that it has already started work on combining the two companies based on the results of the Nov. 22 auction.
“There has been a lot of work done to begin a massive process of integrating” the businesses, Ciena attorney Douglas Bacon said in court.
Nortel argued that allowing a bid after the auction had ended would disrupt the three remaining sales the telecommunications maker is planning as part of its bankruptcy. Potential buyers may not participate in future auctions because they wouldnt know if the results would be final, company attorney James Bromley said in court.
Gross said he expected to issue a final ruling in favor of the sale to Ciena after minor objections had been resolved.
“Cienas bid was the highest and best bid,” Gross said in court.
Nortel, based in Toronto, has held six auctions for its major businesses since filing for bankruptcy in January. Those auctions have brought in $2.9 billion, Bromley said in court. The company plans to sell three more businesses that have revenue of about $1 billion, he said.
$810 Million
On Dec. 1, Nokia Siemens challenged Cienas bid, submitting a new offer of $810 million in cash for the assets. That offer came more than a week after Nokia declined to top Cienas final bid at an auction for the optical-networking business that ended on Nov. 22. The next day, Nokia Siemens issued a statement saying “further bidding could not be financially justified.”
During and after the auction Nokia Siemens, a joint venture between Nokia Oyj and Siemens AG, complained that Cienas offer wasnt really worth $769 million in cash because it included $239 million in convertible notes.
Creditors also had urged Gross to reopen the auction, arguing that it may increase their recoveries by $20 million.
Gross, sitting in Wilmington, Delaware, held a joint U.S.- Canadian court hearing with Ontario Superior Court Judge Geoffrey Morawetz, who was in Toronto. The hearing was linked with an audio and video connection.
The Nokia Siemens offer was designed to provide Nortel $20 million more than Cienas offer because Nortel would have been forced to pay Ciena a breakup fee of about $21 million.
Nortel also won permission to sell its so-called Global System for Mobil Communication for $103 million to the Telefonaktiebolaget LM Ericsson and Kapsch CarrierCom AG. The business provides products for wireless networks.
Since filing for bankruptcy in January, Nortel has been selling units to pay creditors claiming to be owed more than $11 billion. The company was once the biggest maker of telecommunications equipment in North America.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).