Canadian telecommunications equipment manufacturer Nortel Networks has announced that it plans to sell $2.5 billion of securities to increase liquidity in order to help steer the company through its current fiscal difficulties. The company is due to file its planned securities sale with US and Canadian regulators. Insiders at Nortel are hoping that the securities sale will give the company ‘additional financial flexibility’.
The company’s current 10-Q financial report states that the company expects its cash reserve of $3.1 billion will be sufficient to meet its cash requirements in the forthcoming months. Nortel anticipates that it will only require a reduction in its capital expenditure and external funding if revenues and cash flows are lower than expected.
Nortel’s problems have been caused by the general downturn in the telecommunications market. The sale follows reported losses and a number of recent job cuts, which has seen Nortel trim its workforce by half to around 44,000 workers in the last eighteen months.