Industry Minister Tony Clement.Chris Wattie /Reuters
Ottawa's Export Development Canada will finance foreign or domestic acquisitions of Nortel Network Corp.'s assets, so long as the deal benefits the country's economy.
The Crown corporation said Thursday it wasn't discriminating against any party when it agreed to provide a $300-million (U.S.) loan to finance Nokia Siemens Networks' $650-million bid for Nortel's wireless assets.
At the behest of Nortel, EDC has talked to several potential bidders about financing deals for various asset packages to be auctioned. But the Nokia Siemens agreement has been the only one concluded because it's the sole deal for which Nortel requested financing, spokesman Phil Taylor said Thursday.
He said the Crown corporation would consider financing any future deals for Nortel assets that are based on commercial terms and provide a benefit to Canada.
Three companies are currently expected to bid on Nortel's wireless division at a court-run auction Friday: Nokia Siemens, Sweden's Telefon AB LM Ericsson and U.S. private equity firm MatlinPatterson Global Advisers LLC. Mr. Taylor would not comment on whether the other bidders have sought EDC financing. Nor would he say whether the Crown corporation has had discussions with Research In Motion Ltd., which has complained that it wants to buy Nortel assets but has been blocked by the rigid bidding system.
Earlier this week, RIM suggested the federal government was underwriting the loss of a Canadian high-tech icon by financing Nokia's bid. RIM co-chief executive officer Jim Balsillie said his company was prepared to offer a Canadian ownership solution but "found itself blocked at every turn."
In an interview Thursday, Industry Minister Tony Clement said he urged RIM to lead a rescue effort for Nortel late last year.
"With respect to RIM, I encouraged them to make a bid back in December," the minister said in a telephone interview.
At that point, Ottawa was still considering how to respond to Nortel's threatened bankruptcy protection filing. Mr. Clement said he spoke to RIM co-chief executive officer Mike Lazaridis regarding the impact of Nortel's filing in the industry, and whether RIM would be in a position to lead a rescue.
However, he did not commit to a federal bailout. And RIM provided no rescue plan prior to Nortel's decision in January to file for bankruptcy protection, which allows companies to shed debt and other liabilities, such as pension obligations.
Mr. Clement said he never saw a credible business plan from the company, or a "white knight" to lead the rescue attempt, a role that RIM might have played.
The minister said he would still like to see RIM bid for Nortel's key assets, but added he can't intervene in the process, now before the courts.
Acquisitions by foreign companies would be reviewable under the Investment Canada Act if they exceed $312-million (Canadian), but Nortel's operations span several countries and it is not clear whether the Canadian content of the various asset packages up for auction would meet that Investment Canada threshold.
Opposition critics are turning up the heat on the Harper government for failing to find a Canadian solution for the high-tech leader, which has been the largest spender on research and development in the country.
Both Mr. Clement and Mr. Taylor insisted on Thursday that the EDC operates its commercial business at arm's-length from the government, and there was no political direction on the Nortel deal.
Instead, the Crown corporation became involved as Nortel - a long-time customer - was putting together a "stalking horse" bid that would set the stage for the auction of wireless assets, Mr. Taylor said.
"We met with a number of groups that had an interest in the bidding process with Nortel," he said.
But the deal with Nokia Siemens was "the only formal bid to come through." The Finnish-German joint venture made legal commitments to maintain Nortel's existing wireless jobs in Canada.
If another company outbids Nokia Siemens in the auction for Nortel's wireless assets, EDC would be prepared to finance them as well if they were willing to commit to maintaining jobs and research in Canada, Mr. Taylor added.
Similarly, Nortel could turn to EDC to finance the sale of four other groups of assets that will be auctioned off.
The Crown corporation has a dual mandate: providing financing under its commercial account for business activities that provide benefit to Canada, and underwriting government-ordered deals - like the bailouts of General Motors Corp. and Chrysler LLC - under the so-called Canada Account.