Nortel Networks

Nortel Announces Proposed Senior Notes Offering

    Toronto, Canada (ots/PRNewswire) - Nortel Networks(x) Corporation (NYSE/TSX: NT) today announced that its  principal direct operating subsidiary, Nortel Networks Limited ("NNL"), has  commenced a proposed US$2 billion offering of senior unsecured notes (the "Notes") in the United States to qualified institutional buyers pursuant to  Rule 144A under the U.S. Securities Act of 1933, as amended (the " Securities Act"), to persons outside of the United States under Regulation  S under the Securities Act, and to accredited investors in Canada pursuant  to applicable private placement exemptions, subject to market and other  conditions. The Notes to be issued by NNL would be fully and  unconditionally guaranteed by the Company and initially guaranteed by the  Company's indirect subsidiary, Nortel Networks Inc. ("NNI").

    NNL plans to use US$1.3 billion of the net proceeds to repay the US$1.3  billion one-year credit facility that NNI entered into in February 2006,  and the remainder for general corporate purposes, including to replenish  recent cash outflows of US$150 million for the repayment at maturity of the  outstanding aggregate principal amount of the 7.40% Notes due June 15, 2006  issued by the Company's indirect finance subsidiary, Nortel Networks  Capital Corporation, and fully and unconditionally guaranteed by NNL, and  US$575 million (plus accrued interest of US$5 million) deposited into  escrow on June 1, 2006 pursuant to the proposed class action settlement  first announced on February 8, 2006.

    The Notes and related guarantees have not been registered under the  Securities Act or the securities laws of any other jurisdiction and may not  be offered or sold in the United States or to or for the benefit of U.S.  persons unless so registered except pursuant to an exemption from, or in a  transaction not subject to, the registration requirements of the Securities  Act and applicable securities laws in other jurisdictions. This press  release shall not constitute an offer to sell or the solicitation of an  offer to buy the Notes and the related guarantees, nor shall there be any  sale of the Notes and the related guarantees in any jurisdiction in which  such offer, solicitation or sale is unlawful.  This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

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

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