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Private equity firm ‘moving heaven and earth’ in a bid to buy bankrupt Nortel

Will vulture fund buy all of Nortel?

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On The Web

• Ottawa Citizen report
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RESEARCH TRIANGLE PARK, N.C. – Nortel may not be broken up and sold off in pieces after all if a U.S.-based private equity firm has its say.

The Ottawa Citizen is reporting that MatlinPatterson Global Advisors will put together a bid for all of Nortel when a bankruptcy court auction takes place July 24. At this time, Nokia Siemens Networks is planning to bid some $650 million for some of Nortel’s assets. But MatlinPatterson apparently wants it all.

“We are working very hard to respond to the bidding process established by the court,” Jennifer Feldsher, a lawyer for MatlinPatterson, told the Citizen.

“We are moving heaven and earth to put ourselves in a position where we can participate.”

The newspaper also notes that the firm already owns 10 percent of Nortel bonds.

A group of former Nortel executives disclosed plans a few weeks ago to try to buy the bankrupt telecommunications gear maker. But apparently their efforts have failed. They had hoped to get support from Canada’s government.

Now, Nortel’s 30,000 remaining employees as well as retirees, laid-off workers denied severance benefits and debt holders are wondering what will happen at the July 24 auction.

MatlinPatterson describes itself as a “global distressed private equity fund” – in other words, a “vulture fund” that hunts companies in financial trouble but have good value. And as the Citizen and other media outlets keep stressing, Nortel has more than $2 billion in cash. Sales are off sharply this year, but Nortel has valued technology and products.

Those assets include next-generation wireless technology built around “long term evolution,” or LTE, intellectual property. Light Reading has speculated that Nortel isn’t giving up LTE intellectual property rights in the Nokia Siemens deal.

In a follow-up report, Light Reading noted this week: “Those patents are worth an absolute fortune!”

The news service quoted a JP MorganChase analyst Ehud Gelblum as saying royalties from LTE could be worth nearly $3 billion.

Meanwhile, Avaya is reported to have made a $500 million offer for Nortel’s Enterprise Solutions business. Avaya isn’t commenting.

As all these reports indicate, the Nortel saga is far from over.

The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…