RESEARCH TRIANGLE PARK, N.C. – The vultures circling Nortel, which is still-alive but preparing for dismemberment, are growing in number.
On Monday, “vulture fund” MatlinPatterson out of New York disclosed that it had hired former Nortel executive Dion Joannou to spearhead its efforts to acquire Nortel’s remains. Nortel is on record as planning to sell off assets in what Canadian media has called a “garage sale." Friday’s decision by the London 2012 Olympics group to ditch Nnortel in favor of Cisco for intrastructure and fewer dollars for sponsorship at the Games is another sign of impending death of Nortel as we know it.
Meanwhile, two other groups in Canada reiterated interest in acquiring Nortel. But, like MatlinPatterson, they are still seeking financing. And all the groups face a July 21 deadline of submitting bids in U.S. federal bankruptcy court for an auction that’s set to take place July 24. At that time Nokia Siemens will ante up $650 million for Nortel’s best wireless assets.
The bankrupt telecommunications gear maker would be kept whole by MatlinPatterson, which holds some 10 percent of Nortel’s debt. It would be Joannou’s task to rebuild what’s left of Nortel after years of layoffs, cutbacks, downsizing and asset sales. Nortel still employs around 2,000 people in RTP. MatlinPatterson has already said it would move "heaven and earth" to keep Nortel whole.
Joannou certainly ought to understand Nortel and how it operated before falling apart in the last decade. He worked there for 14 years, leaving in 2007, according to the Financial Post. A former head of North American operations, Joannou also at one time was chief strategy officer.
MatlinPatterson insists that it wants to acquire Nortel and then take the company out of bankruptcy “as a reinvigorated independent company,” according to Canadian media reports.
James Bagnall at the Ottawa Citizen pointed out that the “low-ball bid” from Nokia Siemens is keeping other parties interested in acquiring Nortel on the cheap. However, he also noted: “Given the complexity of Nortel’s global operations, that’s not much time to prepare qualified proposals.”
Two groups that include former Nortel executives – Robert Ferchat, an ex Nortel president whose group wants all of Nortel, and John McFarlane, whose group includes wants certain pieces – remain interested. In fact, McFarlane was in New York on Monday trying to raise cash, according to Bagnall.
Nortel also is hinting that there is more interest in its wireless units than from Nokia Siemens.
In fact, Bruce Gustafson, marketing vice president for Nortel’s wireless business, told Wireless Week: “If you’re assuming there are no additional bids because there’s no public disclosure, you’d be mistaken.”
July 24 could be a very, very interesting day.