NOTICE REGARDING RECENT PROGRESS TOWARDS THE RELEASE OF THE PURCHASE PRICE ALLOCATION MONIES FROM THE LOCKED BOX

 

28 April 2017

Nortel Networks UK Limited
Nortel GmbH
Nortel Networks France S.A.S.
Nortel Networks N.V.
Nortel Networks S.p.A.
Nortel Networks B.V.
Nortel Networks Polska Sp. z o.o.
Nortel Networks Hispania, S.A.
Nortel Networks (Austria) GmbH
Nortel Networks s.r.o.
Nortel Networks Engineering Service Kft.
Nortel Networks Portugal, S.A.
Nortel Networks Slovensko s.r.o.
Nortel Networks Oy
Nortel Networks Romania SRL
Nortel Networks AB
Nortel Networks International Finance & Holding B.V.
Nortel Networks (Ireland) Limited
Nortel Networks S.A.

Together "the Companies".

We provide an update on the progress being made on the journey towards the “Plan Effective Date” and release of the monies from the locked box.

On 12 October 2016 the Joint Administrators entered into arrangements with companies in the wider Nortel Group, including those in Canada and the USA and with certain other major stakeholders, to initiate steps to end and settle on agreed terms for the Purchase Price Allocation dispute (the “Settlement”). This Settlement followed years of extensive negotiation, mediation and litigation.

The Settlement is conditional on plans of arrangement being presented to creditors of the US and Canadian debtor groups (the "Plans"). The Canadian Plan was filed in the Canadian court on 4 November 2016 and the US Plan was filed in the US court on 7 November 2016. A joint hearing was held on 25 January 2017 for the Canadian court to sanction the Canadian Plan and for the US court to confirm the US Plan. Once the Plans in both the US and Canada have become "final" (meaning that they are not subject to an appeal or stay), the sale proceeds are to be released from the locked box in accordance with the allocation set out in the Settlement. The Plans were confirmed and sanctioned by the US and Canadian Courts on 25 January 2017.

In February 2017, an appeal was brought against the Canadian Plan in the Ontario Court of Appeal. This meant that the Canadian Order could not be finalised as required for the Plan Effective Date to occur and as such the Locked box proceeds were retained in escrow. The Ontario Court of Appeal denied leave to appeal on 13 March 2017 and, as such, the appellants (the “LTD Objectors”) have a 60 day period to file an application for leave to appeal at the Canadian Supreme Court. Until any appeal to the Canadian Supreme Court is withdrawn, fails or the 60 day period expires, the Settlement will not become effective (the "Plans Effective Date"). Please note that the LTD Objectors are contesting elements of the Canadian distribution plan rather than the Settlement.

In order to progress towards the release of funds from the locked box, the US, Canadian and EMEA debtor groups entered into a Waiver and Reserve Agreement (the "Waiver Agreement") on 27 April 2017 by which the parties agree to waive the condition that the Canadian Plan shall have become "final". The Waiver Agreement provides that the Canadian debtor group establish a cash reserve on account of the LTD Objector's appeal of the Canadian Plan. The Waiver Agreement does not impact on the allocations agreed under the Settlement. The Waiver Agreement is subject to Court approvals in the US and Canada and we understand that hearings are to be held shortly in this regard. Subject to these Court approvals, the Joint Administrators anticipate that the Settlement will become final in the coming fortnight and that the sale proceeds should be released from the locked box during the course of May 2017.

Given the above, we remain confident that the Plan Effective Date will occur on or before 31 August 2017 and subject to the outcome of the above process, we are targeting a first distribution to the creditors of Nortel Networks UK Limited before the end of July 2017 and first distributions to the creditors of the EMEA entities in Q4 2017. The distributions to creditors of those EMEA entities where a CVA has been proposed by the Joint Administrators remain dependent upon the successful approval by the creditors of the proposed CVAs and the granting of orders of the English Court in respect of Expense Bar Date Applications on which we updated creditors separately earlier this month.

We will update creditors following the occurrence of the Plans Effective Date, when the Settlement will have become unconditional.

 

For the Companies listed below, The Institute of Chartered Accountants in England and Wales in the UK authorises A R Bloom, S J Harris, C J W Hill and S J Taylor to act as Insolvency Practitioners under section 390(2)(a) of the Insolvency Act 1986 and the Association of Chartered Certified Accountants in the UK authorises A M Hudson and D M Hughes to act as Insolvency Practitioners under section 390(2)(a) of the Insolvency Act 1986.

The affairs, business and property of the Companies are being managed by the Joint Administrators, A R Bloom, S J Harris, A M Hudson and C J W Hill who act as agents of the Companies only and without personal liability.

The Companies are Nortel Networks UK Limited; Nortel GmbH; Nortel Networks France S.A.S.; Nortel Networks N.V.; Nortel Networks S.p.A.; Nortel Networks B.V.; Nortel Networks Polska Sp. z o.o.; Nortel Networks Hispania, S.A.; Nortel Networks (Austria) GmbH; Nortel Networks s.r.o.; Nortel Networks Engineering Service Kft.; Nortel Networks Portugal, S.A.; Nortel Networks Slovensko s.r.o.; Nortel Networks Oy; Nortel Networks Romania SRL; Nortel Networks AB; Nortel Networks International Finance & Holding B.V..

The affairs, business and property of Nortel Networks (Ireland) Limited are being managed by the Joint Administrators, A R Bloom and D M Hughes, who act as agents of Nortel Networks (Ireland) Limited only and without personal liability.

The affairs, business and property of Nortel Networks S.A. are being managed by the Joint Administrators, A R Bloom, S J Harris, A M Hudson, C J W Hill and S J Taylor who act as agents of Nortel Networks S.A. only and without personal liability.

Nortel Networks S.A. was placed into French liquidation judiciaire on 28 May 2009. The business and assets of the company that are situated in France are now under the control of la liquidateur judiciaire.

We advise that this report is provided pursuant to our appointments as Joint Administrators of the Company. It is provided solely for the purpose of informing creditors of certain aspects of the current status of the Administration. As this report is only an interim indication of the overall position of the Company, and not a valuation of the current or future value of any particular item of debt, and is liable to change, it should not be relied upon as an indication of the final return to creditors and, in particular, neither we nor the Company shall have any responsibility to any person who relies on our report for the purpose of trading in debt of the Company.

The Joint Administrators may collect, use, transfer, store or otherwise process (collectively, “Process”) information that can be linked to specific individuals (“Personal Data”).  They may Process Personal Data in various jurisdictions in accordance with applicable law and professional regulations including (without limitation) the Data Protection Act 1998.