Nokia Siemens Networks says it will hang onto about 830 Canadian employees of Nortel Networks Corp. as part of the plan to buy a major portion of the former technology giant's wireless business.
Simon Beresford-Wylie, chief executive officer of Nokia Siemens, said Monday in a conference call that about 2,500 Nortel employees would transfer to Nokia Siemens, with about a third of them in Canada.
“We believe passionately that this will help keep Canada at the forefront of next generation wireless research and development and, most importantly, maintain jobs in Canada,” Mr. Beresford-Wylie said.
The decision comes as Nortel Networks had its shares suspended by the Toronto Stock Exchange in the morning.
The TSX says it took the move as a result of Nortel's plan to sell its CDMA wireless network business to Nokia Siemens for $650-million (U.S.).
Nortel chief executive officer Mike Zafirovski also said Nortel is in advanced talks to sell other parts of the business within a matter of weeks or months and that it will ask to have its shares delisted from public stock markets.
Normally, it takes about five business days after an application is received before a company's stock is officially delisted from the TSX, said TMX Group Inc. spokeswoman Carolyn Quick.
The 127-year-old Nortel has been operating under court protection from creditors since January, had a stock-market value of just $93-million (Canadian) on Friday when its shares closed at 18.5 cents each.
At Nortel's peak, it employed more than 90,000 people worldwide and its shares were worth the equivalent of $1,245 each in July, 2000, or $124.50 before a 10-for-one stock consolidation.
When the company sought bankruptcy protection, it had fewer than 30,000 employees including several thousand working for it at subcontractors.
Nortel has also been the centre of a dispute involving former employees' severance payments. Currently, the former employees will be treated as creditors and the amount they receive will depend on how the restructuring unfolds.
Pensions are another issue facing Nortel's current and former employees. There are insufficient assets in the pension plans currently to pay 100 per cent of the benefits obligations if the plans are wound up at this time, creating a risk for all plan members whether they are still with the company or not.
Nokia Siemens executives said that it's not assuming Nortel's responsibility as part of the transaction.
“We're not expecting to bring any other liabilities from a benefits perspective,” said Michael Matthews, head of strategy and business development for Nokia Siemens.
He said Nortel employees will be recognized for their previous years of service under their new employer and receive benefits.
Nortel spokesman Mohammed Nakhooda declined to comment.
“I'm not going to speculate on what may or may not happen as this is now entering a stalking horse agreement,” he said in a phone interview.
“We will be going through a court-supervised agreement and it will be premature for me to comment on what may or may not happen with the specifics around the deal.”
Last week, former employees of Nortel descended on Ottawa to ask MPs for help after the company stopped making severance payments after it sought creditor protection in January.
At the heart of the dispute is $45-million in bonus payments taken by Nortel executives while fired workers didn't receive any sort of severance cushion.
Mr. Zafirovski appeared before a Parliament Hill committee to defend the bonus payments, which he said were given to key executives in order to retain their services while the company sold off its non-core assets in an effort to stay in business.
