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NewsRelease
For more information:Pat Cooper Jay Barta+1 425-450-7523 +1 972-685-2381
Nortel Selects Avaya as Successful Bidder for Enterprise Solutions Business
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Will sell the assets of the Enterprise Solutions Business, and shares of Nortel GovernmentSolutions and DiamondWare to Avaya
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Avaya to Pay US$900 Million in Cash to Nortel, with an Additional Pool of US$15 Million Reservedfor an Employee Retention Program
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Canadian and U.S. Court Approvals of Sale will be Sought at a Joint Hearing on September 15
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Combination Provides Current and Future Customers with Investment Protection and Clear PathForward
TORONTO – Nortel* Networks Corporation [OTC: NRTLQ] announced today that it, its principal operatingsubsidiary Nortel Networks Limited, and certain of its other subsidiaries, including Nortel Networks Inc. andNortel Networks UK Limited, have concluded a successful auction of substantially all of the assets of Nortel’sglobal Enterprise Solutions business as well as the shares of Nortel Government Solutions Incorporated andDiamondWare, Ltd. Avaya Inc. (Avaya) has emerged as the winning bidder agreeing to pay US$900 million incash to Nortel, with an additional pool of US$15 million reserved for an employee retention program.The sale is subject to court approvals in the U.S., Canada, France and Israel as well as regulatory approvals,other customary closing conditions and certain post-closing purchase price adjustments.Commenting on the announcement, Nortel Enterprise Solutions President Joel Hackney said:“This is fantastic news for our customers, as this will empower us to continue to deliver industry-leadingsolutions and services focused on unlocking the enterprise business potential enabled by unifiedcommunications. It provides the capability to chart our future with laser-focus, enabling customers to competein new ways with greater scale and resources. We look forward to working closely with our customers,partners and stakeholders during this pre-close phase to ensure that we continue to innovate to meetcustomers’ needs with high-performance, efficient and secure communications solutions.“As we work through integration planning, it is business as usual, and we will continue to focus on supportingour installed base,” Hackney said. “Through deal close and beyond, we will deliver on our stated customercommitments and maintain high levels of service and support. We will ensure our customers can fullyleverage their existing Nortel investment as they benefit from the complementary capabilities of the Nortel andthe Avaya portfolio of products and services.”In addition, given the complementary strengths of the two companies in the U.S. Federal Government market,the combined operations are anticipated to yield a company best-suited to address the unique informationtechnology requirements of the civil government and military.Noted Chuck Saffell, CEO of Nortel Government Solutions:“The companies' strengths in the information technologies sector of the U.S. Federal Government areremarkably complementary. Our combined product offerings, as well as our strong professional servicesbusiness and solutions approach provide a win-win for both our government customers and our business.With our combined knowledge of the federal market, we will be focused on delivering the best-performing,most cost-effective capabilities available to support our customers’ mission. Our goal continues to be helpingour customers provide security, livelihood and well-being for the citizens of the United States.”
Page 2Customers look forward to the potential the future holds for them."Nortel earned the trust of our user group members by delivering innovative, reliable communicationssolutions and ensuring high-levels of service and support, “ said Victor Bohnert, Executive Director of theInternational Nortel Networks Users Association. “With the announcement of today's purchase by Avaya, welook forward to extending that relationship forward to serve the business communications needs of ourconstituency base across the globe."Partners also benefit from the move.Both Nortel and Avaya channel partners will have opportunities to grow their business as the move to unifiedcommunications accelerates and the need for advanced services to design, deploy and manage suchsolutions expand. “The independent members of the Nortel Distributor Alliance Council are excited about thefuture potential that today’s announcement brings to the tens of thousands of enterprise customers wesupport,” said Rick Dawybida, President of DAC Americas. “We look forward to a commitment focused onensuring customers can fully leverage their prior investments while also getting expanded choices. Thecombined portfolio capability of Avaya and Nortel will offer the marketplace industry-leading solutions ascompanies move aggressively to unified communications.”While today’s auction is a significant step in the overall sale process, it is not the final step. Nortel will workdiligently with Avaya to close the sale later this year, subject to the timing of regulatory approvals. Nortel willseek Canadian and U.S. court approvals of the proposed sale agreement at a joint hearing on September 15,2009. The sale close is expected late in the fourth quarter 2009. In some EMEA jurisdictions this transactionis subject to information and consultation with employee representatives.As previously announced, the Company does not expect that its common shareholders or the preferredshareholders of Nortel Networks Limited will receive any value from the creditor protection proceedings andexpects that the proceedings will result in the cancellation of these equity interests.
Media and Industry Analyst Call
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Representatives from Nortel will hold a teleconference/audio webcast formedia and industry analysts at 9:30 AM ET on Monday, September 14, 2009.Teleconference: Webcast:Canada: 1-877-307-5783www.nortel.com/pressconf091409 U.S.: 1-888-339-9435International: 1-613-763-6808Replay: (Available one hour after the conference call)
About Nortel
Nortel delivers communications capabilities that make the promise of Business Made Simple a reality for ourcustomers. Our next-generation technologies, for both service provider and enterprise networks, supportmultimedia and business-critical applications. Nortel's technologies are designed to help eliminate today'sbarriers to efficiency, speed and performance by simplifying networks and connecting people to theinformation they need, when they need it. For more information, visit Nortel on the Web atwww.nortel.com.For the latest Nortel news, visitwww.nortel.com/news.
Certain statements in this press release may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends","estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. 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 that are difficult to predict, and the actual outcome may be materially different. 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 Creditor Protection Proceedings including: (a) risks associated with Nortel's ability to: stabilize the business and maximize the value of its businesses; obtain required approvals and successfully consummate pending and future divestitures; successfully conclude ongoing discussions for the sale of Nortel's other assets or businesses; develop, obtain required approvals for, and implement a court approved plan; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel's; generate cash from operations and maintain adequate cash on hand in each of its jurisdictions to fund operations within the jurisdiction during the Creditor Protection Proceedings; access the EDC Facility given the current discretionary nature of the facility, or arrange for alternative funding; if necessary, arrange for sufficient debtor-in-possession or other financing; continue to have cash management arrangements and obtain any further required approvals from the Canadian Monitor, the U.K. Joint
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