Nortel Networks 8-K 2007
January 2, 2007
Nortel Completes Sale of UMTS Access Business to Alcatel-Lucent
TORONTO Nortel* [NYSE/TSX: NT] announced that the company has closed the sale of assets and liabilities related to its UMTS access business to Alcatel-Lucent. The sale closed on December 31st, 2006. As previously announced, the transaction is for US$320 million in cash less significant deductions and transaction related costs.
The closing of the sale follows the signing of the definitive agreement on December 4 and the signing of the non-binding Memorandum of Understanding between the companies on September 1, 2006. As part of the agreement, approximately 1,700 of Nortels UMTS access employees have transferred to Alcatel-Lucent. Regulatory approvals have been met. With the completion of this sale, Alcatel-Lucent acquired the UMTS access product portfolio, associated patents and tangible assets as well as customer contracts from Nortel.
Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the worlds most critical information. Our next-generation technologies, for both service providers and enterprises, span access and core networks, support multimedia and business-critical applications, and help eliminate todays barriers to efficiency, speed and performance by simplifying networks and connecting people with information. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.
Certain statements in this press release may contain words such as could, expects, may, anticipates, believes, intends, estimates, targets, envisions, seeks and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Nortels current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different. Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following (i) risks and uncertainties relating to Nortels restatements and related matters including: Nortels most recent restatement and two previous restatements of its financial statements and related events; the negative impact on Nortel and NNL of their most recent restatement and delay in filing their financial statements and related periodic reports; legal judgments, fines, penalties or settlements, or any substantial regulatory fines or other penalties or sanctions, related to the ongoing regulatory and criminal investigations of Nortel in the U.S. and Canada; any significant pending civil litigation actions not encompassed by Nortels proposed class action settlement; any substantial cash payment and/or significant dilution of Nortels existing equity positions resulting from the approval of its proposed class action settlement; any unsuccessful remediation of Nortels material weaknesses in internal control over financial reporting resulting in an inability to report Nortels results of operations and financial condition accurately and in a timely manner; the time required to implement Nortels remedial measures; Nortels inability to access, in its current form, its shelf registration filed with the United States Securities and Exchange Commission (SEC), and Nortels below investment grade credit rating and any further adverse effect on its credit rating due to Nortels restatements of its financial statements; any adverse affect on Nortels business and market price of its publicly traded securities arising from continuing negative publicity related to Nortels restatements; Nortels potential inability to attract or retain the personnel necessary to achieve its business objectives; any breach by Nortel of the continued listing requirements of the NYSE or TSX causing the NYSE and/or the TSX to commence suspension or delisting procedures; (ii) risks and uncertainties relating to Nortels business including: yearly and quarterly fluctuations of Nortels operating results; reduced demand and pricing pressures for its products due to global economic conditions, significant competition, competitive pricing practice, cautious capital spending by customers, increased industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry characteristics affecting the telecommunications industry; the sufficiency of recently announced restructuring actions, including the potential for higher actual costs to be incurred in connection with these restructuring actions compared to the estimated costs of such actions and the ability to achieve the targeted cost savings and reductions of Nortels unfunded pension liability deficit; any material and adverse affects on Nortels performance if its expectations regarding market demand for particular products prove to be wrong or because of certain barriers in its efforts to expand internationally; any reduction in Nortels operating results and any related volatility in the market price of its publicly traded securities arising from any decline in its gross margin, or fluctuations in foreign currency exchange rates; any negative developments associated with Nortels supply contract and contract manufacturing agreements including as a result of using a sole supplier for key optical networking solutions components, and any defects or errors in Nortels current or planned products; any negative impact to Nortel of its failure to achieve its business transformation objectives, including completion of the sale of its UMTS access business to Alcatel-Lucent; additional valuation allowances for all or a portion of its deferred tax assets; Nortels failure to protect its intellectual property rights, or any adverse judgments or settlements arising out of disputes regarding intellectual property; changes in regulation of the Internet and/or other aspects of the industry; Nortels failure to successfully operate or integrate its strategic acquisitions, or failure to consummate or succeed with its strategic alliances; any negative effect of Nortels failure to evolve adequately its financial and managerial control
and reporting systems and processes, manage and grow its business, or create an effective risk management strategy; and (iii) risks and uncertainties relating to Nortels liquidity, financing arrangements and capital including: the impact of Nortels most recent restatement and two previous restatements of its financial statements; any inability of Nortel to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional sources of funding; high levels of debt, limitations on Nortel capitalizing on business opportunities because of support facility covenants, or on obtaining additional secured debt pursuant to the provisions of indentures governing certain of Nortels public debt issues and the provisions of its support facility; any increase of restricted cash requirements for Nortel if it is unable to secure alternative support for obligations arising from certain normal course business activities, or any inability of Nortels subsidiaries to provide it with sufficient funding; any negative effect to Nortel of the need to make larger defined benefit plans contributions in the future or exposure to customer credit risks or inability of customers to fulfill payment obligations under customer financing arrangements; any negative impact on Nortels ability to make future acquisitions, raise capital, issue debt and retain employees arising from stock price volatility and further declines in the market price of Nortels publicly traded securities, or the share consolidation resulting in a lower total market capitalization or adverse effect on the liquidity of Nortels common shares. For additional information with respect to certain of these and other factors, see Nortels Annual Report on Form10-K/A, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.