Gores and Siemens Prep Bid for Nortel’s Enterprise Assets


TORONTO (Reuters) – A joint venture of private equity firm Gores Group and Germany’s Siemens AG said on Wednesday it is pushing to submit a bid to acquire the enterprise solutions business of bankrupt Canadian telecom equipment maker Nortel Networks.

The venture, called Enterprise Networks Holdings (ENH), said it is expending considerable resources, time and expense in the expectation of making a competing bid for the assets.

Avaya Inc, with an offer of $475 million, is currently the stalking horse bidder for the Nortel business, which builds telecom networks for companies. [ID:nN2067886]

ENH has filed a limited objection to the proposed bidding procedures for the Nortel unit in the U.S. Bankruptcy Court for the District of Delaware.

It said the procedures have several provisions that not only give Avaya an unfair advantage, but also reduce the likelihood that Nortel’s stakeholders will receive maximum value for the assets.

ENH has asked the court to require that Nortel provide each qualified bidder all information about the assets being sold.

It has also asked Nortel to provide to qualified bidders all documents related to Avaya’s bid for the assets, along with any documents relating to competing proposals for the assets.

Deloitte, which is acting as an adviser to Nortel through the bankruptcy process, has indicated that bidding procedures relating to the sale of the enterprise solutions business are likely to be finalized in court, on or around Aug. 4.

U.S. and Canadian courts approved the $1.13 billion sale of Nortel Networks’ wireless assets to Swedish telecoms equipment maker Ericsson (ERICb.ST) on Tuesday. [ID:nLT337345]

Nortel, once North America’s biggest maker of telecom equipment, filed for bankruptcy protection in January, blaming the economic crisis for derailing its turnaround attempts.

It has started selling key divisions in hopes of generating value for stakeholders, rather than attempting a restructuring that would see it emerge from creditor protection.

Earlier this month, Nortel accepted Avaya’s proposal as the stalking horse bid for the enterprise solutions business. Any competing bids will have to exceed Avaya’s offer.

The proposed asset sale to Avaya [AVXX.UL] will include all the assets of the enterprise business, as well as the shares of Nortel Government Solutions Inc and DiamondWare Ltd.

Nortel’s operations, roughly, consist of the wireless business, the enterprise unit, and the Metro Ethernet Networks unit, which makes Internet infrastructure and includes its optical and carrier ethernet technology.

Avaya Inc specializes in equipment and services that help business customers make phone calls over Web-based networks. The company was bought out by TPG Capital and private equity firm Silver Lake in October 2007.

In a separate court filing, Nortel creditor MatlinPatterson has also made a limited objection to the bidding process for Nortel’s enterprise unit. The firm says that current procedures fail to preserve the right of creditors to propose a plan of reorganization as a qualified bid.

(Reporting by Euan Rocha, Wojtek Dabrowski and Pav Jordan; editing by Peter Galloway)

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