LG-Nortel Joint Venture
Nortel, announced that its principal operating subsidiary, Nortel Networks Limited, has decided to seek a buyer for its majority stake (50% + 1 share) in LG-Nortel, the company's Korean joint venture with LG Electronics. Nortel has made this decision to secure a sound future for the LG-Nortel business, its valued customers and loyal employees.
LG-Nortel is a profitable, standalone business with a strong balance sheet, and has not filed for creditor protection. The joint venture has enjoyed solid revenues and profits since its establishment in November 2005, with several significant customer wins in Korea and abroad. The business achieved a Management Operating Margin** of $341 million, or 27%, in 2008, and Management Operating Margin for the first quarter of 2009 of 26%.
"This proposed divestiture represents the best path forward for LG-Nortel, its customers and employees," said Peter MacKinnon, LG-Nortel's Chairman and General Manager. "LG-Nortel is a strong, independent, technologically astute and commercially savvy organization. With a competitive portfolio of wireless, wireline and enterprise solutions, LG-Nortel is a market leader in Korea and select international markets. Our number one priority is the continued success of LG-Nortel and our customers."
"LG-Nortel is a successful business with an accomplished leadership team, a culture of innovation, a dedicated employee base and a drive to succeed," said Mike Zafirovski, President and CEO, Nortel. "As we work to evaluate the ultimate path forward for all of our businesses, this decision will allow LG-Nortel to embark on the next phase of its journey and realize its full potential."
Pursuant to its ongoing creditor protection proceedings, Nortel Networks Limited will file a motion with the Ontario Superior Court of Justice for approval of a proposed sale process that has been agreed with LG Electronics and the appointment of Goldman Sachs to assist with the proposed divestiture. Any proposed sale that results from the sale process will require the consent of LG Electronics under the terms of the joint venture agreement, and further approval of the Ontario Court.