Categories: Capital Read, Inside the Queensway

There, there, Nortel. Will $30 million in short term financing turn that frown upside down?

by kadyomalley on Wednesday, January 14, 2009 11:13am - 24 Comments

Honestly, I just can’t keep track anymore – who’s most likely to be outraged by this latest outburst of government largess?

Minister of Industry Responds to Nortel Networks’ Restructuring Under Companies’ Creditors Arrangement Act

OTTAWA, January 14, 2009 — On January 14, 2009, Nortel Networks announced that it is seeking an order to initiate a court-supervised restructuring under the Companies’ Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice. The Honourable Tony Clement, Minister of Industry, made the following statement:

“Nortel Networks is known as a leader in the field of information and communications technologies and for its research and development in Canada. The decision to file for creditor protection was made by its Board of Directors in an effort to turn the company around. The Government of Canada appreciates the importance of the telecommunications industry to our economy and will continue to work with Nortel during its restructuring through Export Development Canada (EDC). EDC has agreed to provide up to $30 million in short-term financing through its existing bonding facility and is open to discussing with Nortel post-filing financing in conjunction with other financial institutions. It is important to note that Nortel is filing for court-supervised restructuring under the CCAA, not bankruptcy. Nortel has stated that it has every intention of emerging from this restructuring under the CCAA as a viable business. We will monitor its progress closely.”

The CCAA allows for a court-administered process that gives corporations the opportunity to restructure their business so that they can continue to be a viable and sustainable entity contributing to Canada’s economy.

Background on Nortel’s restructuring-not-bankruptcy here. Also, is it just me, or is anyone else perpetually surprised to rediscover that Tony Clement is now at Industry, while Jim Prentice is – wait, where is he again? Oh, right: environment.

Tags: another line for the budget, jim prentice must be feeling pretty lucky these days, money money money, nortel, tony clement: still no longer the health minister

More by kadyomalley

Clarence Seunarine

Coybe obviously.

Clarence Seunarine

Uh, that should be Coyne.
John D

I’m guessing Coyne has given up by now

Anon

“It is important to note that Nortel is filing for court-supervised restructuring under the CCAA, not bankruptcy”

Clement is misinformed. Nortel has filed Ch 11 bankruptcy protection in the US. (see http://www.nytimes.com/2009/01/15/technology/companies/15nortel.html?_r=1&hp)

30 million in additional credit when the company faces a 107 million debt payment, dwindling cash reserves, and canceled orders won’t help Nortel.

This company needs to be carved up and sold off. Some of its R&D Ottawa operations will probably survive in some form or be absorbed by the Ottawa-based Alcatel operations.

http://www.macleans.ca Kady O’Malley

Far be it from me to attempt to read the mind of our industry minister, but I think he’s trying to point out that Nortel has only gone into court-ordered restructuring in Canada, under the CCAA, unlike what’s going on in the US. It’s Schrodinger’s bankruptcy!

Anon

Semantics, eh?

Clement says court-ordered-restructuring, I say kaput.
archangel

Just don’t open the damn door!

Scott M.

Kady… I’m afraid you’re mistaken, John Baird is still in charge of setting environmental policy.

http://www.macleans.ca Kady O’Malley

And suddenly, the disappearance of Jim Prentice makes sense!

archangel

Kady — you opened the damn door. Drat!

http://carnewsandviews.com jwl

It’s the new Con orthodoxy. Give money to bankrupt companies! Chrysler is also in line for bailout money and it’s quickly circling the drain as well.

http://www.macleans.ca Kady O’Malley

Aw, jwl, I’m starting to worry about you and MYL. I think you might need to start some sort of support group for disillusioned small-c conservatives. Perhaps Colleague Coyne would serve as honourary chair.

madeyoulook

Appreciate the concern, dear Kady. But for small-c conservatives in Canada, we are pretty accustomed to the disillusioned thing. Please worry more about the country and its future. A modicum of respect for basic arithmetic calls for exactly that.

SAB

I cannot figure out who to vote for any more.

Is not the current iteration of the Conservative Party more fiscally liberal than the Chretien Liberals?

http://carnewsandviews.com jwl

“Is not the current iteration of the Conservative Party more fiscally liberal than the Chretien Liberals?”

Too right they are. I actually found myself dreaming of the Paul Martin the other day and it wasn’t a nightmare. Kady is right to be worried about me, myl and others because I think our heads are about to explode. :)
Scott M.

Yes it is. The only thing fiscally conservative they did was lower the GST… other than that, they’ve been spending like mad. And even that wasn’t very prudent — I personally want the entire debt paid off (as contractually possible) before giving tax relief…. we need to stop borrowing from the future!

That brings up the question… which party, and which people will be the future Chretien/Martin team to get us back on track, out of a deficit and paying off our debt?

Andrew (not Potter or Coyne)

Scott, I daresay that the GST cut wasn’t fiscally conservative. It was out-and-out dumb. Corporate tax cuts would have made infinitely more sense.

Beyond that, I don’t think repaying the entire debt is really all that prudent: to accomplish that, we’d need to suck a lot of money out of the economy–money that could more profitably be invested than in repaying 5% bonds. Hell–government should bring our infrastructure up to snuff before even considering further nominal debt repayment. Infrastructure spending tends to yield much higher returns.

Dave

You’re just figuring that out *now*?

Lord Bob

Please, Ms. O’Malley. Can’t we all be outraged? There’s plenty of outrage to go around and warm the cockles of all our hearts.
D

Clement in Industry? Prentice is Environment Minister? Who knew? I guess it really doesn’t matter where they are since most of the current cabinet ministers’ primary activity seems to involve acting as mouthpieces for Harper ill-considered “policy”.
Bunky

Typical conservatives.
HEY Stephen Mulroney.
Stop wasting my money and LET IT DIE.
Government bail-outs only stifle the progress and growth of industry.

The only way I’d ever agree to a bail out is if the top 3 levels of management were fired immediately with no packages and a there was strict and I mean STRICT oversight of the restructure.

And oh yeah Nortel has NEVER been a leader in information and communication technologies but like Bombardier they have been a serious drag on the economy of Canada since the early 1900s and it’s high time it just died.

I can’t wait for the new budget and the next chance to get rid of these brilliant fiscal conservatives.

Lord Bob

As a conservative, I object to the lower-case ‘c’.

No conservative would ever endorse bailing out corporations for political reasons. The proper noun “Conservative” and the adjective “conservative” share only twelve letters, not ideology. I voted for Harper in the last two elections and have had nothing but reasons to regret it and wish that I’d voted for some nobody small party instead. Harper and party have betrayed any hope of getting an actual conservative government in this country for the next generation.

Not that I’m bitter or anything.

Tiamat

At least under socialism money is handed out on the basis of a plan – not willy-nilly and at the 11th hour. So glad we avoided the “drunken spending” of other parties last election, shudder to think, they’d do something crazy and plunge us $40 billion into deficit in their first budget or something. ;)
Sophie

My brain! My braaaaaaaainnnn!
I have been known to defend socialism, and this is just stupid. Because really, the last nearly two decades of program cuts and tax hikes just weren’t painful enough- let’s get inanother deficit so our children and grandchildren don’t have to miss out!