Nortel Networks

Nortel Announces Waivers and Amendments Under Credit and Support Facilities

    Toronto, Canada (ots/PRNewswire) - Nortel(x) Networks Corporation (NYSE: NT , TSX: NT) today announced that  it and its principal operating subsidiary, Nortel Networks Limited ("NNL"),  and NNL's subsidiary Nortel Networks Inc. ("NNI") have entered into an amendment and waiver with the lenders under Nortel's US$1.3 billion one- year credit facility (the "2006 Credit Facility") and that NNL has entered  into an amendment and waiver with Export Development Canada ("EDC") under  NNL's US$750 million support facility (the "EDC Support Facility," and  together with the 2006 Credit Facility, the "Facilities"). The amendment  and waiver agreements, among other things, waive the events of default that  had occurred or would occur under the Facilities in connection with the  Company's and NNL's previously announced need to restate and make  adjustments to their financial results for prior periods, which  restatements and adjustments were included in the Company's and NNL's  recently filed annual reports on Form 10-K for the year ended December 31,  2005 (the "2005 Form 10- Ks"), as well as the delay that occurred in filing  their 2005 Form 10-Ks and the anticipated delay in filing their quarterly  reports on Form 10-Q for the quarter ended March 31, 2006 (the "2006 First  Quarter 10-Qs").

    These amendment and waiver agreements extend the date otherwise applicable under the Facilities by which the Company and NNL are required  to file the 2006 First Quarter 10-Qs to June 15, 2006. While the Company  and NNL expect, as previously announced, to file their 2006 First Quarter  10-Qs no later than the week of June 5, 2006, there can be no assurance  that the Company and NNL would receive any further waivers by the lenders  under the 2006 Credit Facility or by EDC under the EDC Support Facility if  they failed to file the 2006 First Quarter 10-Qs by June 15, 2006. These  amendment and waiver agreements do not relate to or waive the requirements under Nortel's public debt indentures to deliver the 2006 First Quarter 10- Qs to the trustees under such indentures.

    In addition, the amendment and waiver under the 2006 Credit Facility  removed the minimum Adjusted EBITDA covenant and revised the minimum cash  covenant to require that unrestricted cash and cash equivalents of the  Company on a consolidated basis exceed US$1.25 billion at all times and US$ 1.5 billion on the last day of each fiscal quarter (increased from US$1  billion at all times as previously required). The amendment and waiver  under the 2006 Credit Facility also made certain adjustments to the  restrictions on the incurrence of liens and the provisions determining the  percentage of lenders required to amend or waive the terms of the 2006  Credit Facility.

    About Nortel

    Nortel is a recognized leader in delivering communications capabilities  that enhance the human experience, ignite and power global commerce, and  secure and protect the world's most critical information. Our next- generation technologies, for both service providers and enterprises, span  access and core networks, support multimedia and business-critical  applications, and help eliminate today's barriers to efficiency, speed and  performance by simplifying networks and connecting people with information.  Nortel does business in more than 150 countries. For more information,  visit Nortel on the Web at For the latest Nortel news, visit

    Certain statements in this press release may contain words such as " could", "expects", "may", "anticipates", "believes", "intends", "estimates ", "plans", "envisions", "seeks" and other similar language and are  considered forward-looking statements or information under applicable  securities legislation. These statements are based on Nortel's current  expectations, estimates, forecasts and projections about the operating  environment, economies and markets in which Nortel operates. These  statements are subject to important assumptions, risks and uncertainties,  which are difficult to predict and the actual outcome may be materially different. Although Nortel believes expectations reflected in such forward- looking statements are reasonable based upon certain assumptions, they may  prove to be inaccurate and consequently Nortel's actual results or events  could differ materially from its expectations set out in this press release . Further, actual results or events could differ materially from those  contemplated in forward-looking statements as a result of the following (i)  risks and uncertainties relating to Nortel's restatements and related matters including: Nortel's most recent restatement and two previous restatements of its financial statements and related events; the negative impact on Nortel and NNL of their most recent restatement and delay in filing their financial statements and related  periodic reports (including the anticipated delay in filing the Quarterly Reports on Form 10-Q for the first quarter of 2006) causing them to breach  their public debt indentures and, if the delay extends beyond June 15, 2006 , their obligations under their credit facilities, with the possibility  that the holders of their public debt or NNL's lenders would seek to  accelerate the maturity of that debt, and causing, if the delay extends  beyond June 15, 2006, a breach of NNL's support facility with EDC with the  possibility that EDC would refuse to issue additional support under the  facility, terminate its commitments under the facility or require NNL to  cash collateralize all existing support; legal judgments, fines, penalties  or settlements, or any substantial regulatory fines or other penalties or  sanctions, related to the ongoing regulatory and criminal investigations of  Nortel in the U.S. and Canada; any significant pending civil litigation  actions not encompassed by Nortel's proposed class action settlement; any  substantial cash payment and/or significant dilution of Nortel's existing  equity positions resulting from the finalization and approval of its  proposed class action settlement, or if such proposed class action  settlement is not finalized, any larger settlements or awards of damages in respect of such class actions; any unsuccessful remediation of Nortel's  material weaknesses in internal control over financial reporting resulting  in an inability to report Nortel's results of operations and financial  condition accurately and in a timely manner; the time required to implement  Nortel's remedial measures; Nortel's inability to access, in its current  form, its shelf registration filed with the United States Securities and  Exchange Commission (SEC), and Nortel's below investment grade credit  rating and any further adverse effect on its credit rating due to Nortel's restatement of its financial statements; any adverse affect on Nortel's  business and market price of its publicly traded securities arising from  continuing negative publicity related to Nortel's restatements; Nortel's  potential inability to attract or retain the personnel necessary to achieve  its business objectives; any breach by Nortel of the continued listing  requirements of the NYSE or TSX causing the NYSE and/or the TSX to commence  suspension or delisting procedures; any default in Nortel's filing  obligations extending beyond July 15, 2006 for the 2006 First Quarter Form  10-Qs, causing any Canadian securities regulatory authority to impose an  order to cease all trading in Nortel's securities within the applicable jurisdiction or to impose such an order sooner if Nortel fails to comply  with the alternate information guidelines of such regulatory authorities; ( ii) risks and uncertainties relating to Nortel's business including: yearly  and quarterly fluctuations of Nortel's operating results; reduced demand  and pricing pressures for its products due to global economic conditions,  significant competition, competitive pricing practice, cautious capital  spending by customers, increased industry consolidation, rapidly changing technologies, evolving industry standards, frequent new product introductions and short product life cycles, and other trends and industry  characteristics affecting the telecommunications industry; any material and  adverse affects on Nortel's performance if its expectations regarding  market demand for particular products prove to be wrong or because of  certain barriers in its efforts to expand internationally; any reduction in  Nortel's operating results and any related volatility in the market price  of its publicly traded securities arising from any decline in its gross  margin, or fluctuations in foreign currency exchange rates; any negative developments associated with Nortel's supply contract and contract manufacturing agreements including as a result of using a sole supplier for  key optical networking solutions components, and any defects or errors in  Nortel's current or planned products; any negative impact to Nortel of its  failure to achieve its business transformation objectives; additional  valuation allowances for all or a portion of its deferred tax assets;  Nortel's failure to protect its intellectual property rights, or any  adverse judgments or settlements arising out of disputes regarding  intellectual property; changes in regulation of the Internet and/or other  aspects of the industry; Nortel's failure to successfully operate or  integrate its strategic acquisitions, or failure to consummate or succeed  with its strategic alliances; any negative effect of Nortel's failure to evolve adequately its financial and managerial control and reporting systems  and processes, manage and grow its business, or create an effective risk  management strategy; and (iii) risks and uncertainties relating to Nortel's  liquidity, financing arrangements and capital including: the impact of  Nortel's most recent restatement and two previous restatements of its  financial statements; any acceleration under their public debt indentures  and credit facilities, which may result in Nortel and NNL being unable to meet their respective payment obligations; any inability of Nortel to manage cash flow fluctuations to fund working capital requirements or achieve its business objectives in a timely manner or obtain additional  sources of funding; high levels of debt, limitations on Nortel capitalizing  on business opportunities because of credit facility covenants, or on  obtaining additional secured debt pursuant to the provisions of indentures  governing certain of Nortel's public debt issues and the provisions of its  credit facilities; any increase of restricted cash requirements for Nortel  if it is unable to secure alternative support for obligations arising from  certain normal course business activities, or any inability of Nortel's subsidiaries to provide it with sufficient funding; any negative effect to  Nortel of the need to make larger defined benefit plans contributions in  the future or exposure to customer credit risks or inability of customers  to fulfill payment obligations under customer financing arrangements; any  negative impact on Nortel's ability to make future acquisitions, raise  capital, issue debt and retain employees arising from stock price  volatility and further declines in the market price of Nortel's publicly  traded securities, or any future share consolidation resulting in a lower  total market capitalization or adverse effect on the liquidity of Nortel's  common shares. For additional information with respect to certain of these and other factors, see the Company's Annual Report on Form 10-K/A and NNL's  Annual Report on Form 10-K and other securities filings with the SEC.  Unless otherwise required by applicable securities laws, Nortel disclaims  any intention or obligation to update or revise any forward-looking  statements, whether as a result of new information, future events or  otherwise.

    (x) Nortel, the Nortel logo and the Globemark are trademarks of Nortel  Networks.

ots Originaltext: Nortel Networks
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