RIM cries foul over Nortel’s wireless business sale

On the same day that Avaya announced a US$475 million offer for Nortel Networks‘ enterprise division, Research in Motion cried foul over Nortel’s actions in its acceptance of a US$650 million stalking-horse offer for its wireless business from Nokia Siemens.

In a news release, RIM claims that it has been “effectively prevented” from submitting an offer for the wireless business, which is for sale through a bankruptcy action process that is expected to culminate on Friday.

According to RIM, it sought to be qualified as a bidder for the wireless business, but was told to do so it would need to agree to not submit offers for any other Nortel assets for one year.

“In seeking to impose this condition, Nortel and its advisors were fully aware of RIM’s desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel’s business under Canadian ownership,” said RIM in the statement. “Despite repeated efforts, Nortel, its advisors and its court-appointed monitor have rejected RIM’s repeated attempts to engage in meaningful discussions.”

In a statement of its own, Nortel responded to RIM by saying it was disappointed at RIM’s decision to issue a press release. It noted the bankruptcy court set the bidding procedures on June 30th, and RIM did not object to those procedures at the time. Rather, it wasn’t until July 15th that RIM approached Nortel asking to be a qualified bidder, and Nortel has been working with RIM since that time on trying to reach acceptable confidentiality terms relating to Nortel’s intellectual property assets.

“Notwithstanding RIM’s statement today, Nortel continues to be willing to provide RIM with the opportunity to participate in the auction and even without RIM’s participation believes that an active auction will result in maximizing the value of Nortel’s assets,” said Nortel in the statement.

According to RIM, it would be willing to pay in the range of US$1.1 billion for the CDMA and Long Term Evolution Access businesses and certain other Nortel assets. Such an offer, said RIM, would offer far better value to Nortel creditors than the Nokia Siemens bid.

As well, RIM said the loss of the wireless business to a foreign company could have adverse national security implications for Canada, and its urging the federal government to review the situation.

“RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada’s own Export Development Corporation is preparing to help by lending $300 million to another bidder,” said RIM CEO Jim Balsillie in a statement. “RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM’s leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn.”

While RIM may be hoping for government intervention, it doesn’t appear to be coming. In a statement, Industry Minister Tony Clement indicated that while he and his officials are aware of the discussions between Nortel and RIM and are following the situation closely, with Nortel under bankruptcy protection the process is under the jurisdiction of the court.

“As Nortel is in bankruptcy protection, the Government of Canada does not have a say how the Judge rules on any proposed sale of Nortel assets,” said Clement. “This government wants to see Canada’s high tech sector thrive. It would be inappropriate to speculate on any future actions that Nortel may choose to undertake under the Companies’ Creditors Arrangements Act (CCAA) process.”

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Jim Love, Chief Content Officer, IT World Canada

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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