(Adds analyst's comment, details, background. In U.S. dollars
By Wojtek Dabrowski
TORONTO Feb 4 Ailing telecom equipment maker
Nortel Networks Corp NT.TONT.N has suspended its plans to
sell its Metro Ethernet Networks (MEN) unit as it begins its
restructuring under bankruptcy protection.
"The previously announced potential MEN divestiture has
been put on hold while the overall business plan is being
developed," spokesman Mohammed Nakhooda told Reuters on
Analysts had speculated the division, which includes
Nortel's optical and carrier ethernet technology, could fetch
as much as $1 billion.
The growing business -- which accounts for roughly 14
percent of Nortel's revenue -- was put up for sale in
September, but no bids have materialized to date.
Nortel, North America's biggest maker of telecom equipment,
filed for bankruptcy protection in Canada and the United States
last month, blaming the current economic crisis for derailing a
turnaround effort that began in 2005.
It had about $2.4 billion in cash when it sought court
shelter from its creditors and about $4.5 billion in long-term
debt, according to court documents.
Analysts have said the Toronto-based company will likely
have to shed assets at fire sale prices as it fights to
survive. The suspension of the MEN sale signals such moves may
be very difficult to complete given the weak economy.
That's because rather than spending on acquisitions,
potential buyers may opt to hoard cash as they face the
However, filing for court shelter from creditors with a
relatively strong cash position also removes some desperation
from Nortel's divestiture plans, said Duncan Stewart, an
analyst at DSAM Consulting.
"Although they probably didn't get any really great bids,
the fact they are no longer pressured to sell ... gives them a
chance to hang on to a crown jewel," he said.
Nortel shares closed 0.5 Canadian cents lower at 11
Canadian cents on the Toronto Stock Exchange. In mid 2000, at
the height of the company's success, they were worth more than
C$1,100 each, adjusted for a stock consolidation that took
place in 2006.
(Reporting by Wojtek Dabrowski; editing by Peter Galloway)