Nortel Networks Corporation have entered into a "stalking horse" asset and share sale agreement with Avaya Inc. (Avaya) for its North American, Caribbean and Latin America (CALA) and Asia Enterprise Solutions business; and an asset sale agreement with Avaya for the Europe, Middle East and Africa (EMEA) portion of its Enterprise Solutions business for a purchase price of US$475 million.
These agreements include the planned sale of substantially all of the assets of the Enterprise Solutions business globally as well as the shares of Nortel Government Solutions Incorporated (NGS) and DiamondWare, Ltd.
Commenting on the announcement, Nortel President and Chief Executive Officer, Mike Zafirovski said:
"We continue to be fully focused on running our operations and continuing to serve our customers while actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximizes value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible. The CDMA and LTE Access stalking horse asset sale agreement announced on June 19th, and today's agreements around our Enterprise business are solid proof of that value. This represents the best path forward, and we are advancing in our discussions with interested parties for our other businesses."
"The many customers I have spoken with have been highly supportive of our efforts and transparency throughout this process. They value our employees and technology platforms and are appreciative of our service levels which are at multi-year highs."
"Today's agreements underscore the value of Enterprise Solutions and the investments we have made in enterprise telephony, unified communications and data networking core competencies. If successfully completed, this transaction will provide clarity on the path forward for our Enterprise customers, partners and employees, and enable the industry to continue to benefit from Nortel-created technology, know-how and leading-edge innovation."
"We have some of the best talent in the industry and will explore all potential opportunities for them as we move through this process."
In EMEA any impact on the Enterprise Solutions workforce in connection with this proposed transaction will be considered as part of any required information and consultation process with employee representatives or employees.
Joel Hackney, President, Enterprise Solutions added: "The successful buyer will gain access to an industry- leading portfolio that is optimized for real-time communications, bringing speed and simplicity to customers' network environments and allowing them to enhance collaboration, streamline business processes and improve productivity."
Hackney continued: "Enterprise Solutions has strong relationships with key customers and partners around the world, and we have helped them achieve industry-leading differentiation and competitive advantages. We remain committed to serving them without interruption through this process and, as we move forward, we pledge to communicate our progress to the greatest extent possible."
Chuck Saffell, Chief Executive Officer of Nortel Government Solutions, said: "Nortel Government Solutions has built a robust product and services business for U.S. Federal government customers. If successfully concluded, this agreement will offer Avaya the opportunity to continue to grow this business and bring further value to customers."
Nortel will file the stalking horse asset and share sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.
In relation to the EMEA entities to which they are appointed, the UK Joint Administrators have the authority, without further court approval, to enter into the EMEA asset sale agreement on behalf of those relevant Nortel entities. In some EMEA jurisdictions, this transaction is subject to information and consultation with employee representatives prior to finalization of the terms of sale.
In addition to the processes and approvals outlined above, consummation of the transaction is subject to the satisfaction of regulatory and other conditions and the receipt of various approvals, including governmental approvals in Canada and the United States and the approval of the courts in France and Israel. The stalking horse asset and share sale agreement and the EMEA asset sale agreement are also subject to purchase price adjustments under certain circumstances.