The gradual breakup of communications vendor Nortel has gathered pace with the signing of a $650m (£395m) agreement to sell its CDMA and LTE Access businesses.
The Canadian firm has signed a Stalking Horse Sale Agreement with Nokia Siemens Networks (NSN) which will enable the start of a process allowing higher bids to be tendered. The deal covers the entirety of its CDMA business and all its LTE Access assets.
At least 2,500 employees will be given the chance to carry on their roles with NSN. Nortel has also confirmed it is making headway with interested parties to sell off its other business units. The company is also seeking to be delisted from the Toronto Stock Exchange.
NSN has revealed it has secured $300m in loan guarantees from Export Development Canada, a government-owned export credit agency. This will form the better part of a $400m credit facility which will help finance the deal.
This news is likely to stick in Nortel's craw, as last year the firm failed in a bid to secure Canadian government funding to help stave off bankruptcy. The company succumbed in January and has since sold off its Alteon application delivery arm in what seems sure to be the first deal in a fire sale of assets.
Nortel chief executive Mike Zafirovski said: "Maximising the value of our businesses in the face of a consolidating global market has been our most critical priority. We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible.
"This will ensure Nortel's strong assets – technologies, customer relationships and employees – continue to play an important role in driving the future of communications."
NSN chief executive Simon Beresford-Wylie added: "This agreement provides an important strategic opportunity for NSN to strengthen its position in two key areas – North America and LTE – at a price that makes good economic sense.
"It also represents stability for Nortel's existing customers and offers a great opportunity for employees to move into a stable future with an industry winner. The research and development organisation in Canada would become a long-term wireless centre of excellence within NSN, complementing our other global sites."
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