U.S. and Canadian judges approve sale of Nortel's business

Nortel Networks Inc. on Wednesday received the approval of judges in Delaware and Ontario to sell $ 900 million of its units, specializing in the manufacture of business communications systems.

In a joint hearing, involving a link between courts in Wilmington, USA, and Toronto, Canada, where Nortel is based, the U.S. federal bankruptcy judge Kevin Gross and Geoffrey Morawetz Canadian judge approved the sale of Nortel Enterprise Solutions to Avaya Inc., headquartered in New Jersey, for $ 900 million in cash and a contribution of $ 15 million to an employee retention program, Nortel.

The hearing followed an auction completed on Monday morning, and led to Avaya, a private company, agreed to pay nearly double the amount of the initial offer made in an auction. Originally, Avaya had offered $ 475 million per unit of Nortel, which provides telephone systems and other communications equipment companies and large organizations, including government agencies.

Derrick Tay, a lawyer representing Nortel in Canada, said the auction, which lasted for the weekend, included an increase of $ 8 million per hour in the selling price. Tay joked that this figure would barely cover the fees of the professionals involved.

"I think this is good news not only for the creditors," he said, and considered that the agreement will end the uncertainty for employees, customers and potential customers, Nortel.

The court actions relating to the sale of Nortel's Enterprise Solutions business in North America, the Caribbean and Latin America and Asia. Nortel and Avaya have a separate agreement that includes Europe, Middle East and Africa. Avaya said the company still needs court approval in France and Israel, among other procedures.

Meanwhile, Canadian Industry Minister Tony Clement said Wednesday that the government will not prevent the sale of the wireless division of Nortel Networks, for 1,100 million dollars to the Swedish Ericsson.

Nortel, once a giant in the manufacture of telecommunications equipment, came to represent one third of the market value of the Toronto Stock Exchange. However, it declared bankruptcy in Canada and the United States in January, a day before you should make a debt payment by $ 107 million.

The approval of the sale of the business unit that came after Gross rejected an objection by Verizon Verizon Communications Inc., headquartered in New York, is one of the main users of Nortel products and services, and argued that the refusal Avaya to enter into contracts with Nortel telephone operator would check communications systems enterprise customers of Verizon, including military and other government agencies.