Long-Struggling Nortel Files for Bankruptcy
Toronto-based Nortel Networks Corp. filed for bankruptcy protection in Canada and the U.S. on Wednesday, becoming the first major technology company to take that step in this global downturn, the Associated Press reported. The filing came a day before Nortel was due to make a debt payment of $107 million. Facing a sharp drop in orders from phone companies, the telecommunications equipment maker used the bankruptcy filings to buy time to explore restructuring options like selling off assets. Canadian Industry Minister Tony Clement said the government is willing to help Nortel restructure as a viable company by providing up to $24 million in short-term financing and is open to discussing other loans. Even so, analysts were pessimistic about Nortel's prospects. Given the long-term service contracts associated with telecommunications network equipment, "you have to really convince your customers that you're going to be around," CreditSights analyst Ping Zhao said in a recent interview. Read more.
In a related story, trade in Nortel Networks' Turkish unit Netas were suspended on Thursday pending a statement from the company, the Istanbul Stock Exchange said, after its shares fell nearly 6 percent. Shares in Netas fell 5.7 percent on Thursday morning before they were suspended. Read more.