Nortel Networks 8-K 2005
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) OCTOBER 26, 2005
NORTEL NETWORKS CORPORATION
(Exact name of registrant as specified in its charter)
Registrants telephone number, including area code 905-863-0000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On October 26, 2005, the registrants principal operating subsidiary Nortel Networks Limited (NNL and together with the registrant and its other subsidiaries, Nortel) entered into an Amended and Restated Master Facility Agreement dated October 24, 2005 (the Amended Master Facility Agreement) with Export Development Canada (EDC), an Amending Agreement dated as of October 24, 2005 (the Amending Agreement) with EDC and an Amended and Restated Master Indemnity Agreement dated October 24, 2005 (the Amended Indemnity Agreement and, together with the Amended Facility Agreement and the Amending Agreement, the Amendments) with EDC. The Amendments collectively amended and restated NNLs existing support facility (the Facility and, as so amended and restated, the Amended Facility) with EDC. The Amendments maintain the Facilitys total size of up to US$750,000,000, which is comprised of US$300,000,000 of committed support for performance bonds and similar instruments and US$450,000,000 of uncommitted support for performance bonds and/or receivables sales and/or securitizations. The Amendments extended the Facilitys maturity date for an additional year to December 31, 2007. As of September 30, 2005, there was approximately US$181,000,000 of outstanding support utilized under the Amended Facility, of which approximately US$131,000,000 was outstanding as committed support and US$50,000,000 as uncommitted support.
NNLs obligations under the Amended Facility are unsecured and are not guaranteed by any of its subsidiaries. Should NNL or its subsidiaries incur or guarantee certain indebtedness in the future above agreed thresholds, the Amended Facility requires NNL and any such subsidiaries to provide equal and ratable security and/or guarantees of NNLs obligations under the Amended Facility at that time.
The Amended Facility does not materially restrict NNLs ability to sell any of its assets (subject to certain maximum amounts), incur or guarantee indebtedness (subject to the requirements to equally and ratably secure NNLs obligations under the Amended Facility discussed above) or purchase or pre-pay any of its currently outstanding debt. The Amended Facility requires NNL to make certain customary representations and warranties prior to any issuance of support under the uncommitted portion of the Amended Facility and on a monthly basis as long as any support is outstanding under the committed portion of the Amended Facility.
The Amended Facility provides that EDC may suspend its obligation to issue any additional support under the committed portion of the Amended Facility if events occur that would have a material adverse effect on NNLs business, financial position or results of operation. In addition, EDC may suspend or terminate the Amended Facility if an event of default occurs and is continuing under the Amended Facility or if NNLs senior long-term debt rating by Moodys Investors Service (Moodys) has been downgraded to less than B3 or if its senior long-term debt rating by Standard & Poors has been downgraded to less than B-.
Item 1.02. Termination of a Material Definitive Agreement.
Prior to the Amendments, NNLs obligations under the Facility and Nortels obligations under its outstanding public debt securities were (i) secured on an equal and ratable basis by a pledge of substantially all of NNLs and its U.S. and Canadian subsidiaries assets and (ii) guaranteed by certain of NNLs wholly owned subsidiaries organized in the United States, Canada, England, Ireland and Hong Kong. In connection with the Amendments, all guarantee and security agreements previously guaranteeing or securing the obligations of NNL, its subsidiaries and the registrant, under the Facility and Nortels public debt securities were terminated and the assets of Nortel pledged under the security agreements were released in full.
The guarantee and security agreements previously guaranteeing or securing the NNLs obligations under the Facility and Nortels obligations under its outstanding public debt securities were originally entered into in connection with the $1,510,000,000 December 2001 364-day credit facilities (which expired on December 13, 2002). The guarantee and security agreements became effective April 4, 2002, following Moodys downgrade of the NNLs senior long-term debt rating to below investment grade, in respect of the then existing credit facilities. Consequently, on April 4, 2002 and in accordance with the negative pledge covenants in the indentures for all of Nortels outstanding public debt securities, all such public debt securities became, under the terms of the security agreements, secured equally and ratably with the obligations under Nortels then existing credit facilities. Nortels obligations under the Facility became guaranteed and secured under the guarantee and security agreements on February 14, 2003.
Item 9.01. Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 28, 2005