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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 www.nortel.com. For the latest Nortel news,
visit www.nortel.com/news.
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.

Contact:

For further information: Media: Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Investors: +1-(888)-901-7286, +1-(905)-863-6049,
investor@nortel.com

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