Nortel Closes Optical Networking & Carrier Ethernet Business Sale - Update
3/19/2010 8:33 PM ET
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(RTTNews) - Friday, Nortel Networks Corp. (NRTLQ.PK: News ) said that its principal operating subsidiary Nortel Networks Ltd, and certain of its other subsidiaries including Nortel Networks Inc. and Nortel Networks UK Ltd. have completed the sale of substantially all of the assets of Nortel's Optical Networking and Carrier Ethernet businesses to network specialist Ciena Corp. (CIEN: News ).
Ciena paid an all cash purchase price of about US$774 million, having elected to replace the US$239 million principal amount of convertible notes with cash consideration of US$244 million. The payment subject to a working capital adjustment currently estimated as a downward adjustment of about US$62 million. Nortel will provide certain transitional services to Ciena, per terms of the deal.
Pavi Binning, chief restructuring officer, Nortel said, "The sale of our Optical and Carrier Ethernet businesses to Ciena enables customers to continue to benefit from Nortel's rich heritage of innovation in optical networking. It also provides a path forward for 2,000 skilled employees who will now take their expertise to Ciena."
As previously announced, Binning will step down from his role as chief restructuring officer, chief financial officer and executive vice president effective March 21, 2010.
Effective March 22, 2010, John Doolittle will assume the role of CFO of the company and Nortel Networks Limited in addition to his current responsibilities leading the Corporate Group. The company said that in light of the milestones met to date and the focus of the remaining work, the position of CRO will not be filled.
Ciena said that it has already completed several important milestones in its comprehensive integration plan, and remains focused on ensuring a smooth transition for the benefit of both customers and employees. It has in place its senior management and extended leadership teams with areas of responsibility and accountability defined.
Ciena also said that nearly 100% of the employment offers it extended to Nortel's Metro Ethernet Networks or MEN employees have been accepted, including a significant number in management positions. It has ensured that upon closing, the applicable Nortel customer and supply contracts will successfully transition to it. Philippe Morin, previously president of Nortel MEN, has been appointed Ciena's senior vice president, Global Products Group.
NRTLQ.PK closed Friday at $0.07, up 1.45%, on a volume of 11.11 million shares on the OTC.
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