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Courts approve Nortel's business unit sale to Ciena for $769 million

Nortel

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RESEARCH TRIANGLE PARK, N.C. – Nortel won bankruptcy court approval late Wednesday for the sale of its optical and metro Ethernet networks to Maryland-based Ciena for $769 million.

Nokia Siemens Networks had submitted a higher bid of $810 million after the original auction took place on Nov. 22.

However, the U.S. and Canadian judges overseeing the Nortel bankruptcy agreed with Nortel and Ciena that the original offer should be approved.

Ciena’s offer includes $239 million in convertible notes.

The court decision came after several hours of hearings and an agreement between Nortel and Ciena to “change the pricing on its convertible securities under certain conditions,” Reuters reported.

Nortel, which filed for bankruptcy in January, and Ciena attorneys said that the companies were already working on the acquisition when Nokia Siemens submitted its higher bid on Tuesday.

“There has been a lot of work done to begin a massive process of integrating” the businesses, Ciena attorney Douglas Bacon said, according to Bloomberg news.

Nortel has conducted six auctions for its assets and generated $2.9 billion in revenue, Nortel told the court. Three other auctions remain to be held.

Some creditors had asked the court to reopen the Nortel-Ciena deal since Nokia Siemens offered more money and questions were raised about the true value of the Ciena bonds.

In a statement issued just before midnight, Nortel confirmed the court approval of the Ciena sale as well as the sale of some wireless assets to Ericsson and Kapsch Carrier Com for $103 million in cash.

“As announced on November 23, 2009, Ciena's purchase will include substantially all product platforms, patents and intellectual property that are predominantly used in the businesses, and provides for the transition of substantially all of Nortel's Optical Networking and Carrier Ethernet customer contracts to Ciena,” Nortel said.

“Nortel will work diligently with Ciena with a target to close the sale in the first quarter of 2010, subject to the timing of obtaining other regulatory approvals.”

Nortel employs some 1,700 people at its RTP campus.

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