Private equity firm bids for Nortel wireless assets

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The orderly liquidation of Nortel Network Corp.'s wireless assets took a new twist Tuesday afternoon when distressed debt investor MatlinPatterson announced it had submitted a $725-million (U.S.) bid for the assets, $75-million more than Nokia Siemens Networks' offer.

It is the latest move in a tumultuous 24 hours in Nortel's bankruptcy proceedings.

Late Monday, Research In Motion accused Nortel and the court-appointed monitor of blocking its attempts to acquire those and other assets. RIM said it had been prepared to pay $1.1-billion for the package, but was rebuffed because it was going to be prevented from bidding on other undisclosed Nortel assets.

Nokia Siemens Networks won the "stalking horse" rights with a bid of $650-million (U.S.), meaning other offers must top that. The deadline for bidders to qualify was set at 4 p.m. ET Tuesday.

It is not yet known whether RIM also made a bid.

Earlier in the day, Industry Minister Tony Clement said he wanted Nortel to consider a "Canadian bid" for its prized wireless assets, and is urging the company to meet again with Research In Motion Ltd.

"Obviously, while we cannot determine who will be the successful bidder, if there is a Canadian bid in this process I think that is advantageous for that bid to be at least considered," the Industry Minister said Tuesday. "And so it would concern us if there are some procedural difficulties that a Canadian bid would be facing."

Mr. Clement's comments, made during an event at the University of Calgary, came a day after RIM lashed out at Nortel's auction process, saying the BlackBerry maker was effectively shut out of bidding for wireless technology put up for sale after Nortel's filing for bankruptcy protection.

"What I'm hoping will happen is now that this thing has blown up a little bit in the media that Nortel ... actually convene a meeting and maybe resolve some of the procedural difficulties that seem to be at least perception-wise preventing this bid from taking place," Mr. Clement said.

The minister declined to comment on whether he sees Nortel's assets as critical to Canada.

"If I were to have an opinion on that issue at this particular moment in time, I would be prejudicing my own decisions," he said. "This is a court process. It's not a government process. And the fact of the matter is, obviously these assets have a value, because there are companies bidding on them."

It is "difficult to say at this point" whether the disposition of the Nortel assets will be subject to an Investment Canada review, Mr. Clement added.

"It depends on the nature of the investment at this point," he said.

Nortel said that "RIM did not object to the approval of [established bidding]procedures" when they were set by the courts on June 30, and that RIM only submitted a letter expressing interest in the assets on July 15.

"Since that time, Nortel has diligently attempted to work with RIM on acceptable confidentiality terms relating to Nortel's valuable intellectual property assets, but RIM refused to comply with the court approved procedures," Nortel's statement said.

The process established by creditors and the court-appointed monitor, Ernst and Young, set July 17 as a deadline for filing objections to the bidding procedures. On Monday, the court reported that no objections had been received.

The auction of Nortel's wireless assets is set to take place at 9:30 a.m. in New York on Friday, July 24.

RIM has been quietly adding to its R&D portfolio. Last week it acquired Visto Corp.'s patents and some of its intellectual property for $267.5-million, settling a years-long dispute with the software-maker.

Analysts said RIM is interested in the wireless unit for the intellectual property, mainly patents, that come with the Nortel assets. An acquisition of Nortel assets would also likely include some of the company's large losses, which RIM could use to reduce some of its cash taxes of about $1-billion a year.

Nokia Siemens' deal does not give it access to the patents. Some industry insiders have suggested that Nortel may want to keep the patents for itself, and become a licensing firm.

For Nokia Siemens, one of the biggest concerns remains losing talent while it waits for a deal to close. Under terms of the arrangement, the company is not allowed to contact Nortel employees directly, and some engineers have eschewed uncertainly in favour for other opportunities outside Nortel.

In the last couple of weeks, Nokia Siemens has used its own websites and a barrage of meetings with the media to try to persuade employees to stay on board.

"We won't comment at all on other companies bids or intentions," a Nokia Siemens spokesman said Tuesday. "We continue to believe that ours is in the best interest of employees, customers and Canada. Our bid ensures a long-term partner with global scale and proven experience.

"Critically, time is of the essence for all these assets and we can close quickly. It's possible that this [deal]could be closed with NSN within a couple of weeks."

MatlinPatterson said its bid would "preserve as many, if not more, jobs" as the Nokia Siemens bid.