Spotless

SIMON AVERY

From Tuesday's Globe and Mail Last updated on Wednesday, Jul. 08, 2009 10:07AM EDT

TELECOM REPORTER

A wealthy U.S. private equity firm wants to put together a competing bid for the wireless assets of insolvent Nortel Networks Corp.

New York-based MatlinPatterson Global Advisers LLC, which says it owns about 10 per cent of Nortel's $4.2-billion (U.S.) in bonds, may be talking to other creditors about a possible offer that would top the $650-million bid made by Nokia Siemens Networks.

But the effort is uncertain at this point. MatlinPatterson is declining to discuss it and the communications firm that says it represents MatlinPatterson asked not to be quoted or even named. A representative at the investment firm's New York office would not even confirm that it had hired the Toronto communications firm, which issued a statement of behalf of MatlinPatterson yesterday.

"MatlinPatterson is working to put forward a competing proposal that permits this critical part of Nortel to reorganize and emerge from bankruptcy as an independent, reinvigorated, stand-alone Canadian-based company," the statement said.

"It is interested in retaining, for current investors, the inherent value of the company rather than merely accepting a 'fire sale' of its core asset followed by the wholesale liquidation of the remaining businesses."

A U.S. bankruptcy court rejected a motion by MatlinPatterson last week seeking to extend the deadline for the bidding process on Nortel's wireless assets, which closes July 24. Nokia Siemens made its bid last month, and although Nortel has held talks with many potential suitors for its assets since filling for creditor protection Jan. 14, Nokia Siemens remains the only player to put a formal offer before the courts. (In February, Tel Aviv-based Radware Ltd. agreed to pay $18.3-million for some of Nortel's specialized switching technology, but negotiations for those assets began before Jan. 14.)

It's unclear how MatlinPatterson could raise more for the wireless assets at this late stage, and not certain that the firm would be able to extract better results for the technology, which most industry experts agree needs the support of a global player to be viable.

"Until a bid has been formally accepted and acknowledged by the courts it would inappropriate for us to comment," Nortel spokesman Mohammed Nakhooda said.

Nokia Siemens also said it was premature to comment on MatlinPatterson's efforts. But last week Luca Maestri, the chief financial officer of the Finnish-based firm, said no other player was in a position to match the benefits of its proposed deal.

The joint venture of Finland's Nokia Corp. and Germany's Siemens AG has promised to keep the majority of workers in Nortel's wireless unit and to invest to expand its R&D presence in Ottawa, where most staff are based.