Financial woes continue for key Olympic sponsor
Networking and communications equipment vendor Nortel Networks has filed for US Chapter 11 bankruptcy protection.
This should enable the firm, based in Toronto, Canada, to continue operating while a restructuring of its finances is completed, the company said in a statement. The announcement concerns operations in Canada, the US and Europe. Nortel says day-to-day operations should not be impacted at this time.
Mike Zafirovski, president and CEO, said: “I am convinced that by choosing this path at this time, we can put Nortel on sound financial footing once and for all. It will allow us to deal decisively with our cost and debt burden, restructure our business and narrow our strategic focus in an effective and timely manner.”
The statement said that the decision was taken at this time, “with a $2.4bn cash position, to preserve its liquidity and fund operations during the restructuring process.”
The company has been undergoing a restructuring since 2005, but said the current global economic situation had, “compounded Nortel’s financial challenges and directly impacted its ability to complete this transformation.”
The firm has been suffering from financial problems for a number of years. In 2001 Q2, it posted mammoth losses of $19.6bn.
According to the BBC, Nortel employs 95,000 workers around the world, with about 2,000 of those being UK-based.
It was announced in August 2008 that Nortel had won a contract to supply the network infrastructure at the 2012 London Olympic and Paralympic Games. In its role as Official Network Infrastructure Partner Nortel will provide BT with the equipment needed to provide Wide Area Networks (WAN), wireless Local Area Networks (WLAN), call centre and fixed telephony infrastructure.