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Report: Nortel looking to sell share in joint venture with S.K. firm

Nortel may sell joint venture share

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Telecommunications gear may be selling its controlling interest in a joint venture with LG Electronics, a South Korean firm.

On Friday, Nortel’s bankruptcy monitor endorsed the company’s request for an additional 90 days to complete its reorganization plan. An extension would be good through the end of July.

In a bankruptcy report filed in Canadian court latest week by Ernst & Young, the bankruptcy monitor, the LG joint venture has some $237 million in cash, making it one of Nortel’s largest cash holdings at $136 million.

The same document reported that on April 11 the joint venture paid a dividend of $58 million, half of which went to Nortel.

According to Money Today and cited by Dow Jones News Service, {{a href="external_link-1112844"}}Nortel is working with Goldman Sachs as an advisor in seeking to sell its 50 percent-plus one share holdings.

The LG Electronics joint venture manufactures telecom gear.

Nortel, which filed for bankruptcy in both Canadian and U.S. courts in January, faces a May 1 restructuring date. The company has some 2,000 employees at its campus in RTP.

As of April 11, according to E&Y, Nortel had a cash balance of $2.6 billion.

Of that amount, some $661 million was “held” by Nortel’s U.S.-based entities and $198 million by Canadian entities.

“In the Monitor’s view the restructuring of Nortel will require significant additional times to formulate an agreed upon restructuring strategy in conjunction with the Monitor” as well as other entities, E&Y said in its eight such report to the Canadian court.

“The extension of the stay of proceedings to July 30, 2009 is necessary for the restructuring strategy and plan to be fully developed,” E&Y added.

Since bankruptcy proceedings began, Nortel has begun laying off thousands of its global workforce of some 25,000 people. The company also received court approval to end severance payments to workers laid off before the bankruptcy filing. Nortel also received court approval to sell off one business unit and has been rumored to be seeking bids for major parts of its remaining business.