Nortel Networks Corporation

Nortel Networks Corporation
Nortel Networks Limited

Nortel Networks Limited

May 08, 2017 16:27 ET

Nortel Canada Announces Effectiveness of Global Settlement and Support Agreement and CCAA Plan of Arrangement

TORONTO, ONTARIO--(Marketwired - May 8, 2017) - Nortel* Networks Corporation ("NNC") and Nortel Networks Limited ("NNL" and together with NNC and certain of their Canadian affiliates subject to proceedings under Canada's Companies' Creditors Arrangement Act ("CCAA"), "Nortel Canada") announced today the effectiveness of the Settlement and Plans Support Agreement (the "Global Settlement and Support Agreement") entered into October 12, 2016, together with the effectiveness of the CCAA Plan of Arrangement approved by the Ontario Superior Court of Justice on January 24, 2017 (the "CCAA Plan").

As previously announced, the Global Settlement and Support Agreement resolves the allocation dispute regarding the approximately USD 7.3 billion of sale proceeds held in escrow as well as various other claims, disputes and matters among the parties thereto. Pursuant to the Global Settlement and Support Agreement, Nortel Canada is entitled to receive 57.1065% of the sale proceeds in escrow, being approximately USD 4.156 billion. The Global Settlement and Support Agreement also provides for, among other things, the release to Nortel Canada of approximately USD 237 million of other sale proceeds plus a further amount of sale proceeds relating to the transfer of I.P. addresses by Nortel Canada currently held subject to various court orders, as well as payment to Nortel Canada of USD 35 million on account of reimbursement of various costs incurred in connection with the asset sales. Funds are expected to be received by NNL from escrow beginning on May 11, 2017, with the balance of funds anticipated to be received over the course of May 2017.

The CCAA Plan also became effective on May 8, 2017. In addition to implementing the Global Settlement and Support Agreement, the CCAA Plan contemplates, among other things, the substantive consolidation of the assets and liabilities of Nortel Canada, the payment of proven priority claims and the making of pro rata distributions to unsecured creditors of Nortel Canada. Subject to receipt of NNL's allocation entitlement and the satisfaction of certain other conditions to the implementation of the CCAA Plan, initial distributions to unsecured creditors are expected to be made beginning in the late June or early July 2017 timeframe. Ernst & Young Inc., the court-appointed monitor in the CCAA proceedings of Nortel Canada, has previously reported its expectation that unsecured creditors will recover in total between CA 45 cents to CA 49 cents for creditors entitled to be paid in Canadian dollars, and US 41.5 cents to US 45 cents for creditors entitled to be paid in U.S. dollars.

As previously announced, holders of NNC common shares and NNL preferred shares are not expected to receive any distribution or other compensation pursuant to the CCAA Plan.

Further information and copies of the Global Settlement and Support Agreement and the CCAA Plan are available on the Monitor's website at www.ey.com/ca/nortel.

About Nortel Canada

For more information, please visit Nortel Networks Corporation's website at www.nortel-canada.com. For more information regarding the CCAA proceedings, please visit the Monitor's website at www.ey.com/ca/nortel.

Contact Information

For further information, contact: Ernst & Young Inc. in its capacity as Monitor of Nortel Networks Corporation et al. and not in its personal capacity at nortel.monitor@ca.ey.com.

Legal Disclaimer

Certain statements in this press release may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on Nortel Canada's current expectations, estimates, forecasts and projections. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. Nortel Canada's assumptions, although considered reasonable by Nortel Canada at the date of this press release, may prove to be inaccurate and consequently Nortel Canada's actual results could differ materially from the expectations set out herein.

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 the various ongoing creditor protection proceedings, including (a) Nortel Canada's and the other Nortel parties' ability to successfully consummate the Global Settlement and Support Agreement; and (b) Nortel Canada's ability to: implement the CCAA Plan; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel Canada's; maintain adequate cash on hand to fund Nortel Canada; actively and adequately communicate on and respond to events, media and rumors associated with the creditor protection proceedings; retain, or if necessary, obtain court orders or approvals with respect to motions filed from time to time, including maintaining the CCAA stay of proceedings; resolve claims made against Nortel Canada in connection with the creditor protection proceedings for amounts not exceeding Nortel Canada's recorded liabilities subject to compromise; and prevent third parties from obtaining court orders or approvals that are contrary to Nortel Canada's interests; and (ii) risks and uncertainties relating to: Nortel Canada's remaining restructuring work; fluctuations in foreign currency exchange rates; the cease trade orders that have been, or may in the future be, issued by the Canadian securities administrators to prohibit trading in securities of NNC and NNL by reason of NNC and NNL's failure to file their respective financial statements and related disclosure filings by the required filing deadlines; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; a failure to maintain integrity of Nortel Canada's information systems; and Nortel Canada's potential inability to maintain an effective risk management strategy.

Nortel Canada disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.

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