Breaking Up Is Hard To Do

Jun 24th, 2009 – Comment

If Nortel is sold outright rather than coming out bankruptcy a smaller company would this increase the chance that common shareholds would get something for their shares? Or would all the equity be given to the bondholders, secured creditors etc. If they come out of bankruptcy there would likely be a new share issue and […]


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If Nortel is sold outright rather than coming out bankruptcy a smaller company would this increase the chance that common shareholds would get something for their shares? Or would all the equity be given to the bondholders, secured creditors etc.

If they come out of bankruptcy there would likely be a new share issue and the old share would become worthless. Just like Air
Canada did.

 Your thoughts on this or any other Nortel outcome you see would be appreciated

Keith

 

Hi Keith,

The drama at Nortel Networks( NT TSX) will be ending soon, but not well for shareholders. The stock was suspended on Monday and will not trade again on the TSX until it is delisted after the close of trading on Friday June 26,2009.

 

The company filed for protection form creditors on January of this year and has been in the process of attempting to restructure. Earlier this week the company announced a a bid worth US$650M for its wireless network business. The bidder was Nokia Seimens Networks which back in March offered $850M but the uncertainty surrounding Nortel further eroded the value of the assets.

nt2The chart tells the tale of a betrayal that started years ago and this is just the final chapter in this sad story. If your are to take any lesson from this debacle it should be that your first loss is probably your best and smallest loss. There were so many opportunities to sell Nortel since the Tech Wreck of 2000 and preserve some of your capital.

Call you accountant and get them ready to file for your tax loss on this one. Its not coming back.

Happy Capitalism!

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