Another Troubling Sign Of The Times: Nortel in Creditor Protection
If you don’t know already Nortel Networks Corp the Canadian telecom giant files for creditor protection last week.
This is a might fall for a once mighty company, a company almost as old as the telephone itself, company that was an innovator and industry leader. At its peak during the dot.com bubble it was Canada’s largest company accounting for almost one-third of the total value of the Toronto Stock Exchange (TSX).
While technically not bankrupt, Nortel is feeling the full bite of the global credit crunch. Filing for creditor protection was a preemptive move by the troubled company in order to preserve its cash – cash it would not have been able to raise given the financial climate during bankruptcy – needed to maintain day to day operations while it restructures.
One of the many consequences of this move by Nortel and one that will resonate with the Canadian public and will no doubt become a hot political issue in the not too distant future is the possibility that some or all of Nortel’s divisions could fall in to foreign hands. Amongst possible foreign suitors are: China’s Huawei Technologies Co. Ltd., Seimens Networks and Cisco Systems.
However, it is too early to tell the full repercussions of this and other consequences of Nortel’s fall but it is no doubt a troubling sign of the times.
