As expected, Nortel has entered into a "stalking horse" asset and share sale agreement with Avaya for its Enterprise Solutions business.
The purchase price is set at US$475 million. Reports surfaced last month that Avaya was preparing an offer for the business.The agreement includes the planned sale of substantially all of the assets of the Enterprise Solutions business globally as well as the shares of Nortel Government Solutions and DiamondWare, a maker of softphones.
In a statement, Nortel CEO Mike Zafirovski said: "We continue to be fully focused on running our operations and continuing to serve our customers while actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximizes value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible. The CDMA and LTE Access stalking horse asset sale agreement announced on June 19th, and today's agreements around our Enterprise business are solid proof of that value. This represents the best path forward, and we are advancing in our discussions with interested parties for our other businesses.
"The many customers I have spoken with have been highly supportive of our efforts and transparency throughout this process. They value our employees and technology platforms and are appreciative of our service levels which are at multi-year highs.
"Today's agreements underscore the value of Enterprise Solutions and the investments we have made in enterprise telephony, unified communications and data networking core competencies. If successfully completed, this transaction will provide clarity on the path forward for our Enterprise customers, partners and employees, and enable the industry to continue to benefit from Nortel-created technology, know-how and leading-edge innovation."
The International Nortel Networks Users Association (INNUA), which represents more than 4,000 Nortel enterprise customers worldwide, issued a statement saying that it "believes the acquisition will allow the company to refocus its energy and resources on its solutions, and quiet concerns about the corporate structure that has beleaguered the company."
"This chapter in Nortel's history is closed," said INNUA Executive Director Victor Bohnert in the statement. "We understand that there is still much that can change during the auction process. However, we will begin working with Avaya as soon as it's appropriate to determine how we can best represent the collective voice of their new customers."
Under the stalking horse arrangement, Nortel will file the asset and share sale agreement with the U.S. Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.
As previously announced, Nortel does not expect that the company's common shareholders or the preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests. Nortel was delisted from the Toronto Stock Exchange on June 26.